More than megawatts: The uneven socio-environmental returns from renewable electricity Contracts for Difference in the United Kingdom

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Chinese explanation / 中文解读

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Original abstract

Economic analyses of renewable energy policy schemes typically focus on fiscal returns, deployment outcomes, and carbon savings, with broader socio-environmental impacts remaining under-researched. This study evaluates the United Kingdom's Contracts for Difference (CfD) scheme, assessing monetised social and environmental benefits for offshore wind, onshore wind, and solar photovoltaics (solar-PV) between 2016 and 2025. We develop a novel social cost–benefit framework combining avoided CO₂ emissions, estimated using UNFCCC marginal emissions methodologies, and employment-related social value, calculated using an opportunity-cost-of-labour approach. A technology-specific unemployment rate is introduced, weighting regional unemployment by the spatial distribution of renewable capacity to assess interactions with local labour markets. Substantial variation is observed between technologies. Cumulative discounted social and environmental impacts are estimated at £2.7 billion for offshore wind, £230 million for onshore wind, and £14 million for solar-PV. Relative to discounted CfD payments, socio-environmental returns are 0.35, 1.4, and 4.7 respectively. The returns improve across CfD Allocation Rounds (ARs): from 0.29 prior to AR1 to 5.8 in AR5, with an overall average of 0.45. Environmental benefits average £18-per-MWh and employment-related benefits £3.2-per-MWh. The technology-specific unemployment rates are 4.08% for offshore wind, 4.1% for onshore wind, and 3.92% for solar-PV. Monte Carlo analysis identifies carbon social value as the most influential factor, with a one percentage point change from £84-per-tCO₂ altering outputs by 1.3%. Overall, CfDs generate measurable positive socio-environmental impacts, though future CfD policy design should better integrate sustainability returns, domestic supply-chain development and regional skills development to support a just energy transition.

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