Department for Business, Energy & Industrial Strategy
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UK government announces biggest investment into Britain’s tidal power

The UK government is backing tidal energy as part of its flagship renewable energy auction scheme, announcing today its biggest investment in a generation into tidal power.

  • UK government announces biggest investment in a generation into tidal power, kickstarting a new chapter for the UK’s tidal energy industry
  • this will strengthen energy security by adding to our diverse, renewable electricity supply and create jobs across the UK
  • today’s investment in tidal energy further demonstrates the UK’s commitment to build a strong, home-grown renewable energy sector to reduce our reliance on volatile fossil fuels

The UK government will invest £20 million per year in Tidal Stream electricity as part of its flagship renewable energy auction scheme, kickstarting a brand-new chapter for the tidal industry and creating jobs across the UK.

Today’s announcement (24 November 2021) will unlock the potential for a thriving UK tidal power sector, with the cash boost supporting marine technologies which could benefit the whole of the UK.

As part of the fourth allocation round of the Contracts for Difference Scheme due to open next month, the UK government will ensure that £20 million per year will be ringfenced for Tidal Stream projects, giving the marine energy sector a chance to develop their technology and lower their costs in a similar way to the UK’s world-leading offshore wind industry. This will bring the total funding for this allocation round to £285 million per year.

History has illustrated the effectiveness of the scheme’s design in keeping costs down - between the first allocation round in 2015 and the most recent round in 2019, the price per unit (MWh) of offshore wind fell by around 65%.

Over time marine technologies have the potential to significantly contribute to our decarbonisation commitments and will supports hundreds of green jobs across the country, with projects currently in development in North-West Scotland, North Wales and the Southern coast of England.

Tidal energy has the potential to be a very reliable source of generation, given the clockwork predictability of the tides. Including this in the UK’s low-carbon energy mix will make it easier to match supply with demand, building on the UK government’s commitment to build a strong, home-grown renewable energy sector to reduce the reliance on fossil fuels and exposure to volatile global gas prices.

Business and Energy Secretary Kwasi Kwarteng said:

As an island nation we are perfectly placed to capitalise on clean marine energy, building on our booming offshore wind sector which is now a British industrial success story.

We hope to see marine energy follow in the successful footprints of other renewable technologies, where we’ve seen costs fall dramatically in recent years thanks to UK government support.

The investment today provides a major push for tidal power to become a key part of the next generation of renewable electricity projects needed to strengthen energy security as we work to reduce our dependency on volatile fossil fuels.

Energy Minister Greg Hands, said:

Our renewable energy auction scheme has been vital to the UK becoming a world leader in clean electricity generation and helping to bring down prices for consumers.

Today’s dedicated backing for tidal stream power is opening up a new chapter for Britain’s coastal communities and advancing the possibilities for Britain’s marine energy sector to play a significant role in delivering the UK’s green industrial revolution.

Full details of all Contracts for Difference scheme announcements will be released on Thursday 25 November where the UK government will outline plans to launch the biggest ever Contracts for Difference (CfD) allocation round, with this new ringfencing for Tidal Stream expected to bring the total budget for the fourth allocation to £285 million per year.

The Contracts for Difference (CfD) scheme is the government’s primary method of encouraging investment in low-carbon electricity. The scheme has helped to deliver substantial new investment and reductions in the costs of capital for some renewable technologies, such as helping to reduce the price of offshore wind by 65%.

This fourth round of the Contracts for Difference Scheme will open on 13 December 2021. The UK government will launch this auction process with the ambition of supporting up to 12GW low-carbon electricity capacity – more than the last 3 rounds combined.

The costs continue to fall as green technology advances, with solar and wind now cheaper than existing coal and gas power plants in most of the world. This is thanks to clear government signals and investment made ahead and during the COP26 climate change summit, along with targeted support that boosts private sector investment, creates high-quality jobs and builds industries and technology as the UK builds back greener from the pandemic.

Scottish Secretary Alister Jack said:

This UK government allocation of funding for the tidal industry in Scotland, and across the UK, is tremendous news. Harnessing the powers of our seas is a vital step in our transition to the use of greener, cleaner energy and underlines the UK government’s commitment to create and protect highly-skilled jobs while on our journey to net zero by 2050.

With strong wind and solar power industries in the UK it is the natural next step to explore our tidal energy capabilities. It’s an exciting development in supporting of our domestically-produced renewable energy sources.

Welsh Secretary Simon Hart said:

Wales is ideally placed to be a major source of the clean and renewable energy of the future. Harnessing the power of our seas is a vital step in our transition to net zero by 2050 and underlines the UK government’s commitment to create and protect highly-skilled jobs while doing so.

With strong wind and solar power industries in the UK it is the natural next step to explore our tidal energy capabilities. With this investment, Wales can continue to develop its potential as a leader in renewable technology and industry and contribute to the greener global economy of the future.

CEO of Renewable UK, Dan McGrail said:

This is a major step forward for the UK’s world-leading tidal energy industry, allowing us to ramp up the roll-out of our cutting-edge marine technologies and increase the pace of innovation in the sector to become more cost competitive. Ring-fenced funding for tidal stream doesn’t just unlock private investment and secure green jobs today - it also puts us in pole position to capitalise on exports to the global market in due course. That’s why we’ve been calling for this dedicated pot of funding for tidal power.

We need a range of renewable technologies to get us to net zero as fast as possible. As an island nation with superb tidal energy resources to harness, it’s clear that tidal stream should have a key role to play in our shift to clean energy.

Chair of the UK Marine Energy Council, Sue Barr, said:

The impact of this support cannot be overstated. Here in the UK we have the knowledge, skills, people and projects to lead the world in marine energy, but we have been missing a vital piece of the puzzle to unlock investment and allow the sector to scale-up and deliver. The marine energy sector stretches the length and breadth of the UK - from the Isle of Wight to Orkney and Shetland.

This dedicated ringfence will secure our domestic market, support decarbonisation and will enable tidal stream energy to develop; delivering export opportunities, green jobs, and economic growth in the process. We are grateful to ministers and the broader UK government for having listened, understood and acted. This new support for tidal stream brings us one step closer to delivering a Great British success story that will provide both environmental benefits through the generation of renewable energy alongside UK-wide supply chain benefits.

Notes to editors

Contracts for Difference (CfD) contracts are allocated through a competitive auction process where the cheapest projects in each technology group are awarded contracts first, with the auction designed to ensure competitive pressure to keep costs down and protect consumers.

The fourth CfD round aims to increase the capacity of renewable electricity awarded contracts from the 5.8GW achieved in the last round to around 12GW.

Renewable projects are subject to strict planning controls that afford protections to local communities and the environment and guidance will ensure communities are engaged with and are able to benefit from renewable infrastructure in their area.

CfDs give greater certainty and stability of revenues to electricity generators by reducing their exposure to volatile wholesale prices, while protecting consumers from paying for higher costs when electricity prices are high.

The £20 million additional ringfenced budget is for Tidal Stream projects, not Tidal Range (which is a different technology). Tidal Range projects are not eligible to enter into the CfD scheme.

The £20 million Tidal Stream ringfenced budget, and the £285 million total figure, are presented in 2011/12 prices in line with the Control for Low Carbon Levies. These figures are an estimate of annual support in the most expensive year in the first four years following deployment. Actual annual figures will vary over the 15 year lifetime of the contract depending on future wholesale electricity prices, and outcomes of the competitive auction process.

More information on how the Contracts for Difference scheme operates.

Channel website: https://www.gov.uk/government/organisations/department-for-business-energy-and-industrial-strategy

Original article link: https://www.gov.uk/government/news/uk-government-announces-biggest-investment-into-britains-tidal-power

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