The UK government has today announced its biggest investment in a generation into tidal power as part of its flagship renewable energy auction scheme.

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

Tidal energy has the potential to be a very reliable source of generation, given the clockwork predictability of the tides.

According to the Department for Business, Energy & Industrial Strategy, the funding 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.

BEIS said that over time marine technologies have the potential to significantly contribute to 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.

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 ring-fenced 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.

However, 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.

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 the 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 tomorrow - the 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%.

The fourth round of the Contracts for Difference Scheme will open on 13 December 2021.

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 added:

“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.”

Ring-fenced funding for tidal stream puts UK in pole position to capitalise on exports to the global market

Dan McGrail, CEO of Renewable UK described the investment as a major step forward for the UK’s world-leading tidal energy industry, allowing it to ramp up the roll-out of cutting-edge marine technologies and increase the pace of innovation in the sector to become more cost competitive.

He commented:

“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 marine energy sector stretches the length and breadth of the UK - from the Isle of Wight to Orkney and Shetland – and the impact of the support could not 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.

“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.

“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.”

EAC Chair -  funding is a ringing vote of confidence in the sector

Reacting to today’s announcement of the Contracts for Difference scheme and tidal power, Environmental Audit Committee Chairman, Rt Hon Philip Dunne MP, said:

“The additional funding allocated to tidal stream in the Government’s Contracts for Difference scheme is a ringing vote of confidence in the sector.

“Earlier this year, our Committee recommended to Government that tidal stream be explicitly included in Contracts for Difference round 4, and I am therefore delighted that the Government has taken this forward. Providing a separate pot for tidal stream, and setting a strike price, ought to send the right demand signals to encourage investors to back this exciting technology.

“During our Committee’s work considering technological innovations and climate change, we heard how many tidal stream projects are currently unable to proceed to full development due to insufficient funding. I hope today’s announcement opens a pathway to the further development of these projects, and that before too long the massive potential of tidal stream can contribute fully to the UK’s energy mix.”

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.