The UK government has increased the maximum price for offshore wind projects in its flagship renewables scheme.
Following an extensive review of the latest evidence, including the impact of global events on supply chains, the UK government has raised the maximum price offshore wind and other renewables projects can receive in the next Contracts for Difference (CfD) auction to ensure it is performing effectively.
The maximum strike price has been increased by 66% for offshore wind projects, from £44 ($54.5)/MWh to £73/MWh, and by 52% for floating offshore wind projects, from £116/MWh to £176/MWh ahead of Allocation Round 6 (AR6) next year.
This will help ensure projects are economically viable to compete in AR6. Previous CfD auctions have so far awarded contracts totalling around 30GW of new renewable capacity across all technologies since 2014.
In AR6, offshore wind will also be given a separate funding pot in recognition of the high number of projects ready to participate. This will ensure healthy competition among a strong pipeline of projects, helping the UK deliver on its ambition of up to 50GW of offshore wind by 2030, including up to 5GW of floating offshore wind.
The government is also increasing maximum bid prices for other technologies, offering certainty for developers, and keeping the UK at the cutting edge of all renewables. These include geothermal by 32% – from £119/MWh to £157/MWh, solar by 30% – from £47/MWh to £61/MWh, and tidal by 29% – from £202/MWh to £261/MWh. Contracts for Difference are currently awarded based on the outcome of a competitive auction.
“We have started the process of our latest Contracts for Difference auction for renewables, opening in March next year. We recognise that there have been global challenges in this sector and our new annual auction allows us to reflect this. This is a vital part of our plan to have enough homegrown clean energy, bringing bills down for families and strengthening our energy independence,” Energy Security Secretary Claire Coutinho said.
