Large floating wind projects will be required to submit Supply Chain Plans (SCPs) for projects above 300MW when applying for Contracts for Difference (CfDs), and all developers will have to score higher when submitting Supply Chain Plans to BEIS. The changes and others in the SCP regime, now under consultation by BEIS, aim to keep it fit for purpose as development of renewables steps up. Other technologies such as wave and tidal are expected to become subject to Supply Chain Plan requirements once they are being deployed at similar scale.
One consultation said, “As we increase our ambition to deliver on our Net Zero target, we need to ensure that the renewable electricity supply chain remains competitive, to keep cost down, and has the capacity to meet the rising demand for components and services.” (Although one insurer sounded a note of caution about government attempts to build UK supply chains, saying it “limited sharing of experience and data, so that the fast-growing industry has less opportunity to learn lessons from in-service experience.” See article here.)
In its consultation BEIS proposes to raise the pass mark from 50% to 60%, saying that currently “most SCPs only just pass their assessment”. It said, “Plans that only just pass at the 50% mark are unlikely to make sufficient progress against these objectives.” It also plans to “give meaning to” the expression ‘scale of ambition’ in the scoring guidance, as activity, “that improves or goes beyond existing industry standards and practices in a given area.”
Separately, BEIS has published a Call for Evidence asking about the longer term future for SCPs. One issue it wants evidence on is the 300MW threshold. BEIS says, “It is a known issue that some projects change their size by a few MW in order to avoid the requirement, therefore undermining the SCP process within the CfD,” and it wants to deal with that issue. But it also wants to know how SCPs can be flexible enough to apply proportionately to projects for different sizes. Should the process be a negotiation? It also looks at a gradated financial penalty system, “to fill the gap between borderline failure and severe failure to implement a SCPs.”
Meanwhile companies who fall short on delivering CfD projects on time will be excluded from two allocation rounds, instead of one. However the change is being made as allocation rounds move from a biannual to annual basis.