UK details GBP265 mil/year renewable energy auction; focus on offshore wind

Offshore wind fetched the bulk of a GBP265 million/year ($366 million/year) budget announced Sept. 13 by the UK government for its fourth contract for differences allocation round due later this year, with onshore wind and solar projects left to grapple over a small fraction of the whole.

The government allocated just GBP10 million/year to Pot One technologies -- onshore wind, solar and hydropower. It budgeted GBP55 million/year to Pot Two comprising floating wind, tidal stream, geothermal and wave, and GBP200 million/year to Pot Three comprising offshore wind, according to the Department for Business, Energy and Industrial Strategy.

"The new plans set out today deliver on the Prime Minister's Ten Point Plan and will support the next generation of renewable electricity projects needed to power our homes and meet our world-leading climate change targets," said Energy Minister Anne-Marie Trevelyan.

The focus on offshore wind is designed to help meet the government's commitment to ensure the UK has 40 GW of capacity by 2030.

Of the Pot Two funds for emerging technologies. GBP24 million has been guaranteed for floating offshore projects.

For the first time since 2015, onshore wind and solar will also be able to bid. The government is seeking up to 5 GW of capacity from these technologies, with maximum capacity limits of 3.5 GW imposed on both.

"This will support investment in all parts of Great Britain, particularly Scotland and Wales," BEIS said.

No capacity limits have been applied to Pot Two and Pot Three technologies. Previously, BEIS had said up to 12 GW of offshore wind could be awarded in the allocation round.

CFDs are 15-year private law contracts between renewable power generators and the Low Carbon Contracts Co., a government-owned company that manages the program.

Contracts are awarded in a series of competitive auctions, which have run every two years since 2015.

In the third allocation round held in 2019, 2.6 GW of offshore wind capacity was awarded at GBP39.65/MWh for delivery in 2023-24, and a further 2.85 GW at GBP41.611/MWh for delivery in 2024-25.

In its latest five-year forecast published Aug. 4, S&P Global Platts Analytics saw 2023 baseload UK power averaging more than GBP72/MWh, while dipping to about GBP63/MWh in 2024.