Secretary of State Ed Miliband has announced the budget for this year’s Contracts for Difference (CfD) round, the sixth, is being increased by £500 million to over £1.5 billion. Of that, £1.1 billion is set aside for offshore wind – more budget available than all of the previous auctions combined. DESNZ said that would “send a strong signal to industry to invest in UK waters”.
The uplift comes on the day of the first meeting of the Clean Energy Mission Board – chaired by the Energy Secretary and attended by Ministers from across Whitehall – as part of plans for a mission-driven government. The board will meet to ensure a relentless focus on delivering the mission of clean power by 2030 and accelerating towards net zero.
Energy Secretary Ed Miliband highlighted that the CfD regime returns money to consumers when wholesale electricity prices are higher than the agreed Contract for Difference price, saying that over the winter of 2022/23, “Contracts for Difference payments reduced the amount needed to fund government energy support schemes by around £18 per typical household”.
The Allocation Round 6 budget includes:
• £1.1 billion for offshore wind, an uplift of £300 million.
• £185 million for established technologies such as onshore wind and solar, an uplift of £65 million.
• £270 million for emerging technologies such as floating offshore wind and tidal, an uplift of £165 million.
Energy UK’s chief executive, Emma Pinchbeck said: ”Offshore wind is critical to hitting the government’s 2030 target and we know that the vast majority of this capacity must be delivered through this auction round and next year’s. That remains a huge challenge but this is certainly a big step in the right direction and another welcome demonstration of the government’s ambitions.”
Dan McGrail, Chief Executive of Renewables UK, said: “This auction will not unlock investment in all shovel-ready projects, so the government will need to ensure that the next auction rounds focus on project delivery to ensure we achieve the Prime Minister’s clean power mission and increase the confidence of investors in the UK’s supply chain”.
Now the budget has been set, the auction will take place in August with successful projects to be announced in September 2024.