The UK Government has announced new contract for difference (CfD) strike prices for renewable technologies and an update to the key CfD contract terms.
CfDs will reduce the risks faced by low-carbon electricity generators, by paying a variable top-up between the market price and a fixed price level (the strike price) and promote investment in all forms of such clean energy generation.
The UK has reduced subsidy support for onshore wind and solar energy by £5 and £10 respectively in 2018/2019, while it backed offshore wind power by guaranteeing to pay the developers the difference between wholesale power prices and a fixed strike price of £140 an MWh for the fiscal year.
The government has set the strike prices and updated contract terms to achieve its objectives including at least 30% of the total energy generation to come from renewable energy resources by 2020; decarbonisation; security of supply and minimising cost to consumers.
With these updated contract terms and strike prices, the government expects to attract additional investments of around £40bn in renewable electricity generation projects up to 2020 that is expected to double the UK's current installed renewable capacity of 20GW.
The additional investment will generate enough clean energy to power around ten million homes; curb CO2 emissions by more than 20 million tonnes; and support up to 200,000 jobs by 2020.
Additionally, the government has announced that 16 renewable generation projects have reached the next stage of Final Investment Decision Enabling for Renewables (FIDeR) process to secure an early form of CfD and the final selection of projects will take place in spring 2014.
Altogether, these reforms will help to support up to £110bn of additional investment across the electricity sector by 2020.
The UK Department of Energy and Climate Change secretary Edward Davey said the new announcement will deliver record levels of investment in green energy by 2020.
"Our reforms are succeeding in attracting investors from around the world so Britain can replace our ageing power station and keep the lights on," said Davey.