By Nina Chestney
LONDON (Reuters) - The British government said on Monday it will distribute up to 557 million pounds in subsidies for less-established renewable energy sources through auctions that will take place every two years from mid-2019.
The next so-called contracts for difference (CfD) allocation round for renewable energy technologies such as offshore wind will open by May next year, the government said.
Energy companies and turbine makers who are investing in UK offshore wind, such as Sweden's Vattenfall, Britain's SSE (LON:SSE), EDF (PA:EDF), MHI Vestas, welcomed the announcement.
Under the CfD scheme, the government guarantees qualifying projects a minimum price at which they can sell electricity, with renewable power generators bidding for CfD contracts in a round of auctions.
Offshore wind and, for the first time, remote island wind providers will be able to bid for contracts to power up to four million homes, it said.
The government will hold another allocation round in 2021 and auctions around every two years.
Depending on the price achieved, the auctions will deliver between 1 and 2 gigawatts of offshore wind each year in the 2020s.
"The government's guarantee that auctions will be held every two years from 2019 onwards provides much-needed certainty for the UK's offshore wind industry," Paul Cooley, utility SSE's director of generation development, said in a statement.
SSE is involved in the development of the 2.6 billion pound Beatrice offshore wind farm off the Scottish coast, which should be completed in spring next year.
"At a time of uncertainty, providing visibility of future auctions will help support investment in clean growth and further drive down the cost of offshore wind," said Danielle Lane, UK country manager for Vattenfall.