Developers secured support for more than 35 megawatts (MW) of new Scottish tidal stream capacity in the latest Contracts for Difference (CfD) auction, in a move hailed as transformative for the sector.
In total, 11 gigawatts (GW) of renewables capacity won CfD support in the fourth allocation round (AR4) of the UK’s flagship clean energy procurement auction.
The auction marked the first meaningful stride for tidal energy developers after the Department for Business, Energy and Industrial Strategy guaranteed an additional £20 million of ringfenced CfD funding for projects last year.
It followed calls from both developers and politicians for targeted support for the fledgling sector.
Reacting to today’s news, Scottish Renewables chief executive Claire Mack said: “Make no mistake, today’s auction results are a turning point for tidal power, showing as they do that it has a place in the UK’s energy mix.”
Orbital Marine Power secured backing for two of its projects, totalling 7.2MW of capacity, at a strike price of £178.54 for delivery in 2026/27.
The company’s chief executive Andrew Scott said the award was “an important validation” of the firm’s O2 technology and its strategic approach.
Around 150 jobs are expected to be created through the manufacture and installation phases of this capacity alone, which the company described as “an unprecedented level” of UK role creation for the construction phase of a renewable energy project.
“We will now build on our track record for financing pioneering projects – as evidenced by the O2 – continuing to offer investors the opportunity to scale up a predictable and reliable new source of clean energy. This journey will ultimately also reduce costs and increase jobs across our UK supply chain,” Mr Scott added.
Another tidal developer, Simec Atlantis Energy (AIM: SAE), secured the same strike price support for 28MW of capacity at its MeyGen site in the Pentland Firth – already the largest tidal project in the world – which the company said would help establish the region as “the global home of tidal energy”.
Chief executive Graham Reid commented: “The significance of today’s announcement cannot be downplayed. We are going to be delivering the world’s first commercial scale tidal array and we now have a clear runaway, with future CfD rounds, to deliver the full c.400MW of tidal power generation at MeyGen.
“I can’t thank enough all those who have championed, supported, and invested in our business to achieve this milestone. Our absolute focus will be on the delivery of this project.”
A further 5.6MW of capacity will be supported at the Morlais tidal project off Anglesey in Wales, for delivery by 2025/26, taking total tidal capacity in AR4 to over 40MW.
However, Ms Mack also cautioned as to the risks of pricing the technology unsustainably low in future allocations.
“While the prices achieved in this most recent auction are an incredible milestone, it must be remembered that tidal energy is still in a developmental phase and most developers will be unable to bid so low in future,” she noted.
“We would therefore urge the UK Government to confirm that its plans for future auction rounds include a dedicated, ring-fenced budget for tidal stream projects and also to commit to reforming the Contracts for Difference mechanism to allow UK supply chain companies to be more competitive.”