UK continues tidal stream ringfence for third year, increases budget

The UK government has set a £10 million ringfence for tidal stream in this year’s renewables auction, representing a third consecutive year.

The UK Department for Energy Security and Net Zero (DESNZ) announced that tidal stream and wave energy will compete in Pot 2 of the Contracts for Difference (CfD) mechanism.

In recognition of supply chain cost pressures, the Administrative Strike Price has increased for tidal stream by 29% to £261/MWh and 5% for wave energy to £257/MWh.

This will see the UK continue to build on the unprecedented 90 MW+ tidal stream deployment pipeline that the two previous ringfences have secured.

The budget for Pot 2 has been increased from £35 million in 2023 to £105 million in 2024, meaning that tidal stream could have access to more than the £10 million ringfence.

Last year 11 tidal stream projects were awarded contracts at £198/MWh, securing over 50 MW of capacity.

Seven developers including British, Spanish and U.S. companies secured contracts to develop a total of 53MW of tidal stream energy across four locations in the UK .

The Marine Energy Council (MEC) has welcomed the continuation of the tidal stream ringfence: “Maintaining a consistent route to market is critical in supporting investor confidence in the UK’s marine energy sector. Our ambition is to see UK content embedded in projects deployed here and around the world,” said Sue Barr , Chair of the MEC.

The MEC has been calling for a £30 million ringfence for tidal stream to accelerate deployment and support the technology moving down the cost reduction curve via economies of scale, volume, and accelerated learnings.

“The industry welcomes the Government’s continued support for the tidal stream sector. However, we are ready to go further and faster in realising the UK’s over 11GW of entirely predictable tidal stream energy resource. The industry is ready to deliver against a £30m ringfence,” said Barr .

“In addition, with significant progress being made in wave energy in Portugal and Ireland, the UK Government should engage with the sector to create a route to market for this abundant renewable energy resource.”

According to recent research by Offshore Renewable Energy (ORE) Catapult and Imperial College London (ICL), tidal energy has the potential to provide 11.5 GW to the UK energy system, 11% of the UK’s electricity demand, and tidal stream projects could contribute up to £17 billion to the UK economy by 2050.

System modeling conducted by ICL found the gross benefit of tidal stream energy to be around £2 billion per year, which means an average saving of £71 for each UK consumer every year.