Yesterday, COP27 began in the Egyptian resort town of Sharm el-Sheikh. Hundreds of diplomats and officials world-wide have arrived to explore and negotiate strategies for international climate action.
At COP26 last year, the Breakthrough Agenda was launched by 45 world leaders which was a pledge to strengthen international collaboration, so that clean technologies become the most affordable options in all regions by 2030.
The UK has been a clean energy leader. It was the first major economy to make a legislative commitment to Net-Zero and Low Carbon Contracts Company (LCCC) is dedicated to delivering this commitment as part of this government’s carbon budget plans.
For LCCC to fully meet its goals, we must stay on track and show that we are making great progress, individually as an organisation and collectively with our stakeholders.
We are delighted to say that LCCC has achieved significant growth over the past year. Following the successful conclusion of the recent fourth Contracts for Difference (CfD) Allocation Round, we have more than doubled the number of contracts under management to 168 CfDs. When those projects are all generating, they will provide around 30% of Great Britain’s power needs. The portfolio includes both renewable generation technologies and new nuclear, with offshore wind making up the largest part of the portfolio.
LCCC’s main aim is operational delivery excellence in all the schemes we manage - coordinating the timely delivery of CfD allocation rounds across delivery partners, managing the contracts with generators through to successful operations and delivering our role in the Capacity Market (CM).
We are continuing to work with the Department for Business, Energy and Industrial Strategy (BEIS) and other delivery partners on the move to annual CfD auctions with Allocation Round 5 (AR5) due to open in March 2023.
The investment these new CfDs will support provides economic benefits to communities across Great Britain (GB). It will also enhance the diversity and independence of GB’s generation portfolio.
Our successes since COP26 include the following:
- As part of Allocation Round 4, we have 98 new contracts and we expect that growth to continue each year;
- We have provided over £0.5 billion to electricity suppliers as high wholesale power prices have led CfD generators to pay LCCC, which in turn has limited the increase in the domestic price cap for consumers;
- We have advised BEIS on how we can apply the success of the CfD to other decarbonization challenges, such as Carbon Capture Usage and Storage (CCUS) and hydrogen production;
- We are fully engaged with delivering our role as the revenue collection counterparty for the nuclear Regulated Asset Base (RAB) funding model for Sizewell C;
- We are working with BEIS on the evolution of the CfD and CM Schemes, putting forward ideas through the Review of Electricity Market Arrangements (REMA) for how those schemes can effectively contribute towards the Net Zero ambition.
Our role is expanding, so much so that we expect we will be delivering schemes that are responsible for over one-fifth of the carbon reductions required between now and 2035, when the sixth Carbon Budget needs to be delivered.
In the short term, we are now looking forward to the implementation of AR5 next March, the operation of the CM this winter and the continuing growth for our business.
COP27 presents a rare opportunity for the world to come together to discuss the best course of action to tackle climate change. LCCC will be supporting this by implementing meaningful and practical actions to influence and deliver change within our current landscape and into the future.