Government offers £205m to low-carbon power in latest CfD auction

The previous CfD auction from July 2022 was lauded by the Government as the most successful ever, with more than 11GW of renewables capacity securing contract

Fresh off a Spring Budget that gave little mention of renewables, the UK Government has confirmed that £205m is available to renewable technologies in its latest CfD auction.

The CfD scheme is the Government’s main policy mechanism to support low-carbon electricity generation projects in the UK. To date, the scheme has awarded contracts to projects totalling almost 27 GW of clean energy capacity.

The fifth CfD allocation round – which is the first CfD auction to run annually – offers £170m for established technologies such as offshore wind and has also set aside £10m for new tidal stream technologies.

Minister of State for Energy Security and Net Zero Graham Stuart said: “Our flagship Contracts for Difference scheme is already delivering clean, homegrown energy as well as growing a green economy with green jobs.

“Today’s budget announcement, the move to annual auctions and continued investment in renewable energy will limit the impact of events like Putin’s illegal war in Ukraine and drive our overriding priority for the UK to have amongst the cheapest wholesale electricity prices in Europe. I am excited to see the opportunities that will open for Britain’s world-class renewable industries as annual auctions kick off this year, enhancing the UK’s reputation as among the most attractive places to invest in for a secure, affordable and prosperous future.”

The previous CfD auction from July 2022 was lauded by the Government as the most successful ever, with more than 11GW of renewables capacity securing contracts.

In total, 93 projects with existing planning permission across the UK secured contracts, totalling 11GW in capacity. According to the Government, this is greater than the capacity of all three previous CfD rounds combined.

The majority of contracts went to offshore wind projects, with 7GW confirmed through the scheme. Once online, it will increase the nation’s overall offshore capacity by one-third and builds towards the Government’s aim of installing 50GW of offshore wind capacity by 2030.

The prices for contracts of offshore were also 70% lower than those secured in the first CfD allocation back in 2015. Both onshore wind and solar energy were included in CfD auctions for the first time since 2015. Onshore secured around 0.9GW of new capacity, with prices per unit 45% lower than in 2015, while more than 2.2GW of new solar capacity was secured.

The announcement comes in the same week that RenewableUK research found that low-carbon generation sources accounted for more than half of Britain’s total electricity generation over the winter months.

From November 2022 to February 2023, when demand is at its highest, renewables and nuclear generated more than 60% of Britain’s total electricity generation – around 56.13 terawatt hours (TWh).

In total, onshore and offshore wind provided 60% of the low-carbon power, followed by nuclear which generated 26%. RenewableUK stated that this was enough energy to power 14 million homes all year round. It also reduced the demand for imported gas by almost 10 billion cubic meters – more than two-thirds of the UK’s total Liquified Natural Gas imports – saving more than £15bn in energy costs.