Britain’s flagship renewables scheme has received its biggest ever funding boost from government, with more than £1 billion for its upcoming auction. The budget for the sixth Contracts for Difference (CfD) allocation round (AR6) was announced by the Chancellor at the March 2024 budget.
This follows the increase in the maximum price for offshore wind and floating offshore wind in November and aims to help to deliver the UK’s ambition of up to 50GW of offshore wind by 2030, including up to 5GW of floating offshore wind. The UK is currently home to five of the world’s largest offshore windfarm projects.
The CfD scheme gives renewable energy projects a guaranteed price for the electricity they generate – this has increased renewable electricity generation from 7% in 2010 to over 40% now.
Photo by Nick Russill
Separate pot for offshore wind
Following a review of the latest evidence, the government has allocated a record £800 million for offshore wind, which has been given a separate funding pot. This makes this the largest round yet, with four times more budget available to offshore wind than in the previous round.
This latest allocation round (AR6) of the UK Government’s renewable auction will open for bids from developers on 27th March, with funding split into ‘pots’. The previous round, AR5, saw no bids from floating offshore wind developers. Tidal stream, wave energy and floating offshore wind will all compete in Pot 2 of the allocation, which has been significantly increased from £37 million in 2023 to £105 million in 2024.
The AR6 budget includes:
- £800 million for offshore wind
- £105 million for emerging technologies such as floating offshore wind, including a ringfenced £10 million budget for tidal
- £120 million for established technologies such as onshore wind and solar
Analysis
Tom Hill, Programme Manager at Marine Energy Wales, said “It is encouraging to see the UK Government continuing to support tidal stream technology, with the announcement of the continued £10 million ringfence.”
The Energy UK trade association also welcomed the increased budget but warned that AR6 is likely to deliver 3GW-5GW of offshore wind capacity, meaning, they believe, that the next auction (AR7) would have to acquire an unrealistic 16GW of offshore wind to reach the 50GW of offshore wind by 2030 target.
Minister for Nuclear and Renewables Andrew Bowie said at the announcement, ‘This unprecedented renewables budget funding to the tune of over £1 billion will keep the UK at the cutting edge of the industry. This announcement will ensure we offer certainty to developers and continue to attract investment in the UK.’