The contracts were awarded under the the Department of Energy & Climate Change’s (DECC) Final Investment Decision enabling for Renewables scheme to five offshore wind farms, two coal plants converted to biomass, and one biomass-combined heat and power plant.
According to the report, the DECC has provided certainty of support to the contractors at least five months earlier than they could have achieved under the full Contract for Difference (CFD) regime.
The NAO said the government’s decision could provide higher returns to contractors than needed to secure the investment.
It noted that it is not clear that the entire £16.6bn of commitments were needed so soon to meet the UK’s target of generating 15% of its energy from renewables by 2020.
The early contracts used 58% of the total funds available for renewables’ CFDs to 2020-21.
NAO head Amyas Morse said the DECC awarded the early contracts without price competition to avoid an investment gap.
"The investments supported should contribute towards the UK achieving its renewable energy target in 2020, but it is not clear that awarding fewer early contracts would have put the achievement of that target at risk," Morse added.
"As the Contracts for Difference regime has the potential to secure better value for consumers through price competition, committing so much of the available funding through early contracts, without competition, has limited the department’s opportunity to secure better value for money."
Image: The contracts were awarded to five offshore wind farms, two coal plants converted to biomass, and one biomass-combined heat and power plant. Photo: Courtesy of dan/FreeDigitalPhotos.net.
