Industry welcomes results of UK renewables auction

The success of the UK’s latest annual auction for contracts for difference (CfD), which secured 9.6 GW of capacity, signals that the UK is back in the global race for clean energy investment, said RenewableUK’s chief executive Dan McGrail.

“This wide range of projects, across technologies, are vital steps in building a clean, affordable energy system and reducing our dependence on expensive fossil fuels,” he commented further following the release of the auction results.

According to the industry organisation, investor confidence in the UK market is returning after last year’s auction failed to attract bids from offshore wind projects.

Nine offshore wind projects totalling 4.9 GW secured contracts in the auction at a cost of between GBP 54 (USD 71/EUR 64) and GBP 59 per MWh. A total of 22 onshore wind projects for a combined 990 MW were also successful at GBP 50.90 per MWh, confirming the technology as one of the UK’s cheapest sources of new power, RenewableUK pointed out.

The winning projects include the Green Volt floating offshore wind project, which secured a contract for 400 MW and is set to become the world’s largest floating wind farm. The project will supply power to the UK grid and to nearby oil and gas platforms.

As noted by RenewableUK, the 9.6 GW of new capacity is equal to 9% of the UK’s total current electricity capacity of 107.5 GW. Inflated to current prices, the strike prices, which are set in 2012 terms, translate to GBP 70-71/MWh for onshore wind and solar, and GBP 75-82/MWh for offshore wind, while based on Ofgem data, the current wholesale electricity price is GBP 84/MWh.

The solar sector secured record capacity in the CfD auction -- 3,288 MW across 93 projects, at a strike price of GBP 50.07 per MWh.

“The CfD system is currently working well for solar. We look forward to future allocation rounds and will work with the Government to deliver the capacity necessary to meet its renewable energy targets,” said Solar Energy UK director of policy and delivery, Gemma Grimes.

Of the successful projects, 884 MW of capacity is for delivery in 2026, 509 MW in 2027, and 1,895 MW in 2028.

Solar Energy UK said that a solar farm of above 50 MW has for the first time secured a CfD. EDF Renewables’ 420-MW Longfield project in Hertfordshire, the first to be approved nationally rather than by a local authority, has secured a contract for 299 MW, the organisation explained.

Welcoming the auction results, the REA (Association for Renewable Energy and Clean Technology) called for greater ambition and widening the scope of the CfD mechanism to technologies such as geothermal and existing renewables assets coming to the end of their generation contracts.

Mark Sommerfeld, REA deputy director of policy, said: “Along with celebrating these results, we also highlight the importance of looking to future CfD allocation rounds. With delivery dates for projects in this auction already going out to 2029, it is a reminder of the limited time available to contract the generation needed to meet the government’s 2030 Clean Power Mission.”

(GBP 1 = USD 1.313/EUR 1.187)

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