The first annual Contracts for Difference (CfD) auction has secured 3.7GW of clean energy, though no bids for offshore wind were brought forwards.
The government announced that 95 projects had been successful with their bids – up from 93 in the previous round. The majority of this comes form solar, which account for around half (1.9GW) of all capacity secured at a price of £47/MWh, followed by onshore wind, where 1.5GW worth of projects were successful – all located in Scotland – at a price of £52.29/MWh. Geothermal projects were also given backing for the first time, with three successful, totalling a collective 12MW.
Elsewhere, £10mn of the £227mn budget was ringfenced for tidal stream projects, leading to 11 being returned worth 53MW, secured at £198/MWh. In reaction, the Marine Energy Council (MEC) called for an ongoing commitment to ringfencing funds, pointing to research which suggests 6GW of tidal stream projects being deployed can cut energy systems costs by more than £1bn each year.
MEC Policy Director, Richard Arnold said that successive support through auctions could result in 100MW of tidal stream power being deployed as soon as 2028 and more projects in the UK’s waters than the rest of the world combined.
Arnold continued: “By maintaining the ringfence the Government can harness an entirely predictable renewable resource, level up with green jobs in coastal communities, maintain its international leadership and export technology and expertise around the world.”
Despite the “record number” of projects, as stated there were no offshore or floating offshore wind projects present. The government attributed this to a “global rise in inflation and the impact on supply chains” and assured it remains committed to securing 50GW of offshore wind and 5GW of floating wind by 2030.
However, the consensus from around industry has been that the £44/MWh price floor that was set made things difficult, failing to take into account the higher costs facing the industry. The Offshore Wind Industry Council (OWIC) described it as a “missed opportunity” and noted that had all offshore wind projects eligible to bid done so, then enough capacity to power the equivalent of over 5mn homes could have been secured.
RenewableUK stressed the need for the government to take urgent action to rebuild investor confidence. It is specifically calling for a package of reforms to the scheme, support for supply chains and fiscal measures to ensure the UK can keep pace with growing global competition to attract clean energy investment to these shores.
“There has been a perfect storm of inflation, supply chain disruption and spiralling interest rates that mean the cost of financing and building offshore wind have risen sharply,” explained RenewableUK’s Executive Director for Policy and Engagement, Ana Muscat. “We urgently need Government to provide reassurance that next year’s auction round will offer investable parameters, and that in the longer term a joined-up strategy for maximising the potential of the offshore wind sector is developed.”
