UK's fourth CFD round opens, aims for 12 GW low carbon generation

The UK's fourth allocation round for low-carbon power projects opened Dec. 13, aiming to secure 12 GW of capacity via GBP285.00 million/year ($377.63 million) funding, the Department for Business, Energy and Industrial Strategy said.

With a budget allocation of GBP200 million, offshore wind is set to dominate the competition, while GBP75 million has been set aside for emerging technologies, including floating wind (GBP24 million) and tidal stream (GBP20 million).

Solar and onshore wind are included in the subsidy auction for first time since 2015, but only for funding of GBP10 million/year.

"The fourth round aims to secure more capacity than three previous rounds combined with additional offshore wind capacity that could generate electricity equivalent to powering around eight million homes," BEIS said.

This was based on an estimated 8 GW of consented offshore wind capacity succeeding in the competition, operating at an average load factor of 51% in 2025.

The round is to close to applications on Jan. 14, 2022, with final results expected to be announced in spring-summer 2022.

Contracts for differences are 15-year private law contracts between renewable electricity generators and state-owned manager Low Carbon Contracts Company (LCCC).

The lowest price bids within each technology pot win CFDs (see table).

UK Early Agreement and CFD auctions have awarded contracts to 13 GW of offshore wind and 16 GW of other low-carbon capacity (including the 3.2 GW Hinkley Point C nuclear plant) across 58 projects.

S&P Global Platts Analytics forecasts 2025 UK power prices at close to GBP61.00/MWh, with 13 GW of average wind generation that year, up from 9.8 GW in 2023.

UK CFD ALLOCATION ROUND FOUR BUDGET ALLOCATION

Source: BEIS