Any developers bidding to construct solar plants with more than 300 MW of generation capacity in the latest round of the UK’s clean power auction program will have to draw up a supply chain plan showing how they will address matters ranging from skills gaps to new technology to modern slavery.
July 5, 2022Max Hall
The UK government has published details of the supply chain development plans which must be drawn up by the developers of big clean energy plants who wish to be eligible to bid for contracts for difference (CfD) incentives.
A questionnaire published by the Department for Business, Energy & Industrial Strategy (Beis) last week called for examples of three new technologies or innovative approaches used by developers as well as details on how projects would avoid modern slavery and labor exploitation throughout their “entire supply chain.”
Under the terms of the latest round of the government’s clean energy auction scheme – which opened in December 2021 and had a project proposal deadline in January – developers planning sites with a generation capacity of more than 300 MW must provide a supply chain plan.
The content of those plans was put out for consultation last year and Beis has now published the questionnaire which the relevant developers must complete. Four sections, labelled green growth, infrastructure, innovation, and skills, will be scored and Beis noted: “Applicants that do not score at least 50% as a percentage of total marks in each section for their supply chain plan are unlikely to pass and to be issued with a statement by the secretary of state approving their supply chain plan.”
That instruction appears to indicate applicants can fail to score for individual questions which carry marks, ranging from the 25 points awarded for anti-slavery procedures, health and safety policy, and procurement strategy up to the 225 marks awarded for physical improvements to infrastructure.
Under “green growth,” applicants must indicate how much UK content their project will use, for components and spending; provide three examples of how they have encouraged suppliers to drive down their carbon footprint; and three ways they have tried to attract new suppliers, particularly small and medium-sized businesses.
The UK-content question carries 175 of the the 500 total marks allocated to each of the four sections, with the carbon footprint measures rating just 75 points.
The infrastructure section of the questionnaire requires developers to spell out five examples of infrastructure improvements; three cases of them mitigating project impact on communities and the environment; and to explain how their supply chain fits local strategies and what their community engagement approach is.
Under innovation, applicants have to present three examples of R&D investment they have made and the same number by their supply chain partners. The three innovative approaches or technological solutions required are eligible even if only used as demonstrators and the explanatory examples stated “activities may include sharing of data.”
In terms of skills, the requirements include five examples of how the developer and supply chain companies have identified and filled skills gaps plus an explanation of hiring strategy and the number of direct jobs and apprenticeships to be created by the project, per megawatt-hour of generation capacity.
Under the CfD incentive rules, contract applicants competitively bid to secure the lowest guaranteed strike price for the electricity they generate. Renewables plants receive the wholesale electricity price for the power they produce and when that figure is below the strike price agreed through the auction tender, the government will top up the difference. When the money received from the wholesale market for the clean electricity is higher than the strike price, the generator will hand the difference back to the government.
The current, fourth round of the UK’s clean power auction program is the first to feature solar and onshore wind since 2015, with GBP10 million ($12.1 million) of the GBP285 million budget earmarked for those technologies. The government hopes the current auction will secure 5 GW of solar and onshore wind as part of a total 12 GW of new clean power capacity.
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