UK's fourth CfD renewable energy auction in late 2021 to aim for 12 GW

London — The UK's fourth Contracts for Difference (CfD) auction in late 2021 will aim to contract up to 12 GW of renewable energy capacity, doubling the amount contracted in the last auction held in late 2019, the Department for Business, Energy and Industrial Strategy said Nov. 24.

The round would also extend the number of technologies supported, with offshore wind, onshore wind, solar, tidal and floating offshore wind projects all eligible to bid, BEIS said.

"This will be coupled with a new consultation looking at the supply chain and ways to support more jobs and private investment by increasing the competitiveness of UK manufacturers," the department said.

The supply chain proposals are aimed at increasing UK content in projects and are designed to increase the "clarity, ambition and measurability" of commitments made by developers when they bid, with new measures if they fail to deliver on commitments, BEIS said.

The government has set a target of 60% of UK content in offshore wind projects by 2030. In 2017, ORE Catapult reported the figure at 32%, forecasting this to have risen to 50% in 2020. The Offshore Wind Industry Council put UK content at 48% several years ago.

As announced in March, solar and onshore wind projects will be able to bid for support for the first time since 2015, coupled with a government commitment to update guidance for new onshore wind farms in England "to fully reflect the impacts and benefits to local communities," BEIS said.

The auction will be divided into three pots: pot one for onshore wind and solar PV; pot two for floating wind, advanced conversion technologies and tidal stream; and pot three for offshore wind.

The UK's third CfD round in September 2019 signed up 5.8 GW of mainly offshore wind capacity.

Some 2.6 GW of offshore 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 2024/2025. The prices were 2012 real prices, so in fact the lowest bid was nearer GBP46/MWh in today's prices.

The results represented a 31% reduction on the UK's previous cheapest strike price for offshore wind at GBP57.50/MWh, awarded in March 2017.

In October, UK Prime Minister Boris Johnson confirmed the government would raise its target for offshore wind capacity by 2030 from 30 GW to 40 GW, providing funding of GBP160 million ($207 million) for offshore wind ports like Teesside and Humberside.

In addition, the government created a new target for floating offshore wind to deliver 1 GW by 2030.

Contracts for Difference are 15-year private law contracts between renewable electricity generators and the Low Carbon Contracts Company (LCCC), a state-owned company that manages CfDs at arm's length from government.

The scheme currently supports 49 renewable electricity projects across a range of technologies, totaling 15.5 GW.