In a recent online announcement, the UK Department for Energy Security and Net Zero (DESNZ) declared that the government has elevated the maximum price for offshore wind projects within its flagship renewables scheme. The objective is to solidify the UK’s position as a global leader in clean energy.
The DESNZ update stated, “following an extensive review of the latest evidence, including the impact of global events on supply chains, the government has raised the maximum price for offshore wind and other renewables projects in the next Contracts for Difference (CfD) auction to ensure its effectiveness.”
According to the news, the maximum price has been raised by 66% for offshore wind projects and 52% for floating offshore wind projects. This adjustment aims to ensure that projects are sustainably priced and economically viable for participation in Allocation Round 6 (AR6). It builds upon the success of previous CfD auctions, which have awarded contracts totalling around 30GW of new renewable capacity across all technologies since 2014.
In AR6, offshore wind will receive a separate funding pot, acknowledging the high number of projects ready for deployment. This measure is intended to foster healthy competition among the projects and contribute to the UK’s goal of achieving up to 50GW of offshore wind by 2030, including up to 5GW of floating offshore wind.
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The announcement emphasised that the CfD scheme guarantees renewable energy projects a set price from the government for the electricity they generate, encouraging continued investment in the UK. Established nearly a decade ago, the CfD has played a crucial role in reducing the cost of renewables, aiming to provide good value to electricity consumers and drive down costs, while also creating new jobs and contributing to economic growth.
Additionally, DESNZ disclosed in the update that the government is increasing maximum bid prices for geothermal by 32%, solar by 30% and tidal by 29%.
Energy Security Secretary, Claire Coutinho stated, “we have started the process of our latest Contracts for Difference auction for renewables, opening in March next year.” She acknowledged global challenges in the sector and emphasised the importance of the annual auction in reflecting these challenges, describing it as a vital part of the plan to secure enough homegrown clean energy,
In response to the DESNZ news, industry body Offshore Energies UK (OEUK) highlighted the significance of the announcement in anchoring the future of offshore wind energy in the UK. OEUK’s Wind and Renewables Manager, Thibaut Cheret, emphasised the importance of fostering confidence in firms to invest in Allocation Round 6, contributing to robust, innovative projects that boost energy jobs and supply chains.
Cheret also underscored the success of the North Sea energy mix as a British industrial achievement and outlined the potential for over GBP 200 billion ($248.6 billion) of private capital to be unlocked before 2030. He concluded by expressing the organisation’s commitment to collaborating with policymakers and members to make the UK an attractive destination for energy business.
The update concluded with statistics indicating the UK’s significant wind energy production in 2022, contributing to a 24% year-on-year increase. The global leaders in wind energy production for the same year were China, the U.S. and Germany.