UK overhauls clean energy auction, government to view bid data

A series of significant reforms are to be made to the UK's clean energy auction framework, including the ability for the government to see anonymized bid information, it said May 6 in a consultation response document.

The changes are set to be ushered in ahead of this year's pivotal bidding round.

Under the new rules, UK Energy Secretary Ed Miliband will have the option to view bid prices and capacity across all technologies, though the identity of bidders will not be disclosed.

Such a tactic would help avoid a repeat of 2023's contracts for difference, or CFD, auction, when offshore wind developers abstained from bidding due to low bid ceilings, and also ensure the monetary budget is maximized.

"We believe the secretary of state having improved price-related information will help to more effectively balance capacity procured and consumer bill costs when setting the budget," the government said in its response to an industry consultation that opened in February.

Elsewhere, the government plans to replace its usual contract budget notice with a capacity ambition that will be communicated prior to the opening of the bidding round.

It will also remove the use of "flexible bids" -- which allowed bidders to vary the capacity, price and/or delivery date of their projects -- and is exploring whether the auction timeline for offshore wind can be expedited.

The changes are intended to apply to CFD Allocation Round 7, or AR7, which is due to open to applicants this summer. The government said previously that it is targeting to procure some 12 GW of offshore wind across the next two or three CFD bidding rounds.

"This is essentially the end of the CFD auction as we know it, as considerable changes in bidding behavior will be necessary to take advantage of the new regime," Adam Bell, director of policy at consultancy Stonehaven, said in a post on LinkedIn.

Bell said the changes would mean companies could no longer use the monetary budget to try and work out their competitors' costs, as it would mean deducing how much capacity the government wants to buy and at what price.

"This is very much to the advantage of Ed Miliband whisperers," Bell said.

The reforms outlined in the government's May 6 consultation response require regulatory amendments, with several other planned rule changes able to be made by reworking the CFD Allocation Framework.

That includes allowing offshore wind farms to bid into auctions before they have won planning consent, and extending the length of the CFD contract beyond the current 15 years.

A final government response to the consultation, covering all non-legislative reforms, will be published before AR7 opens.

The government will also confirm in AR7's CFD Allocation Framework which technologies Miliband's new bid-viewing powers will apply to.