Allocation Round 6 (AR6) will take place in August, with developers bidding to move forward with renewable energy projects for fixed electricity prices under the government's Contracts for Difference (CfD) scheme. The budget increase will see funding for offshore wind rise to £1.1bn (up £300m), funding for established technologies such as onshore wind and solar increase to £185m (up £65m) and emerging technologies such as floating offshore wind and tidal receiving £270m (up £165m).
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It is hoped the increased investment will help kickstart the UK’s stalled renewables pipeline after a disastrous CfD round in 2023 under the previous government. The scheme’s design awards contracts through a series of competitive auctions, where the lowest price bids are successful. However, last year’s CfD round saw just 3.7GW of new renewables allocated, down from 10.7GW the year before. The huge drop was largely attributed to zero bids coming from the offshore wind sector, where the maximum price developers could bid was cut by £2 to £44 per MWh.
“Last year’s auction round was a catastrophe, with zero offshore wind secured, and delaying our move away from expensive fossil fuels to energy independence,” Energy Secretary Ed Miliband said in a statement. “Instead, we are backing industry to build in Britain, with this year’s auction getting its biggest budget yet. This will restore the UK as a global leader for green technologies and deliver the infrastructure we need to boost our energy independence, protect billpayers, and become a clean energy superpower.”
According to the Department for Energy Security and Net Zero, the increase means the AR6 budget is seven times higher than that of AR5.
Responding to the government’s announcement, Energy UK’s chief executive, Emma Pinchbeck said: “The sooner we can get new wind and solar projects up and running, the sooner we can boost our energy independence with clean, homegrown power that reduces our reliance on expensive foreign gas and helps protect us from a repeat of the price shocks that have hit customers hard in recent years.”
Ringfenced budget for tidal stream technology has increased from £10m to £15m. Though UK tidal technology is in relative infancy compared with wind and solar, there is potential for it to play a key role in the energy transition, particularly given its predictable nature.
“The UK government has demonstrated international leadership in increasing the tidal stream ringfence to £15m,” said Sue Barr, chair of the Marine Energy Council.
“This is an important step forward in realising the potential of this entirely predictable renewable energy resource. The UK can lead the world in harnessing the power of its tides, and in exporting tidal stream technology and its expertise around the world.”
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