The UK Government has announced a budget exceeding £1bn for the contracts for difference (CfD) allocation round 6 (AR6) for renewable energy projects.
This is the largest budget allocation for a single CfD auction to date, and aims to support a range of renewable energy technologies.
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The upcoming auction, the sixth of its kind, is scheduled to open for bids on 27 March 2024.
The AR6 budget notice outlines the allocation of funds across different technology groups, described as pots.
Established technologies such as solar and onshore wind, categorised as pot 1, will be allocated £120m, while £105m will be earmarked for emerging technologies including floating offshore wind and geothermal (pot 2).
The largest portion of the budget, £800m, will be allocated for offshore wind projects (pot 3).
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By GlobalDataThe budget represents a substantial increase from the previous auction in 2023, which had a budget of £227m.
The auction in 2023 saw no offshore wind project bids as the prices guaranteed were considered too low by developers.
Commenting on the government’s announcement, RenewableUK CEO Dan McGrail stated: “We welcome this budget increase, as it recognises that global economic conditions have changed, and it will secure a significant amount of new offshore wind capacity and private investment, as well as creating thousands of new jobs.
“However, the Treasury has missed the opportunity to maximise the amount of capacity the UK could have secured in this year’s auction for new offshore wind farms. We have more than 10GW of capacity eligible to bid this summer.
“Building this is essential if we are to make up lost ground from last year’s auction and create the substantial pipeline required to accelerate supply chain investment and growth in the UK. This funding will only secure between 3 and 5GW.
“This means a delay in attracting billions of pounds in private investment, which we could have secured in this year’s auction to build and operate these projects, and opportunities to grow our supply chain to provide goods and services for projects here and abroad will not be maximised.”
The UK’s Crown Estate recently launched the Celtic Sea floating offshore wind leasing round to award 4.5GW of generation capacity leases.
