UK opens 12-GW Round 4 under CfD auction scheme

The UK government today launched the fourth allocation round of the Contracts for Difference (CfD) scheme that will back up to 12 GW of renewable electricity generation capacity.

The support programme will provide GBP 285 million (USD 377m/EUR 334m) per year to low-carbon electricity projects as part of the government’s renewable energy auction mechanism. This is the biggest round of the scheme as it is seeking to award more capacity than the previous three rounds combined.

Applications will be accepted by January 14, with final results due to be announced in spring-summer 2022. The scheme allocates 15-year CfDs.

The total support is split across three pots, with the budget pot for offshore wind projects being set at GBP 200 million per year. Less-established renewables will be backed with GBP 75 million, of which GBP 24 million is earmarked for floating wind projects and some GBP 20 million is set aside for tidal stream proposals.

The remaining pot envisages GBP 10 million of support for established technologies such as onshore wind and solar, which were previously excluded from the scheme. Up to 5 GW of capacity will be backed with this budget, while a limit of 3.5 GW is imposed on both onshore wind and solar photovoltaic (PV) technologies.

There will be no capacity cap for emerging technologies and offshore wind.

“More than 16 GW of wind could be ready to compete and over 23 GW of renewables overall. We could see investment of over GBP 20 billion in this round [..],” said Dan McGrail, CEO of RenewableUK.

Round 4 is open to an expanded number of technologies, in line with the nation’s 2050 net-zero goal and efforts to improve the resilience and independence of its energy system. The CfD scheme facilitates cost reductions as in the case of offshore wind, for which prices have fallen by roughly 65% between 2015 and 2019.

According to the government’s estimates, the offshore wind capacity expected to be delivered as a result of the new round could power around 8 million homes. The calculation is based on the estimated consented pipeline for offshore wind of around 7 GW.

The UK aims to have 40 GW of offshore wind turbines by 2030, of which 1 GW from floating wind parks. So far, 13 GW of offshore wind and 16 GW of new renewable energy projects have been successful in CfD auction rounds.

(GBP 1.0 = USD 1.322/EUR 1.172)

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