A record amount of renewable energy was secured on 7 July 2022 via the biggest ever round of the UK government’s flagship auction scheme. The fourth round of the Contracts for Difference (CfD) scheme has been the most successful ever held, securing almost 11GW across a range of technologies, including offshore wind, solar, onshore wind, and – for the first time – floating offshore wind and tidal
CfDs are designed to give certainty to project developers to invest in new renewable energy infrastructure by protecting them from volatile wholesale prices. A unique benefit of the CfD scheme is that when wholesale electricity prices are high, as they have been in recent months, generators pay money back into the scheme to reduce the net costs of the scheme to consumers.
The greatest capacity – almost 7 GW - has been secured from new offshore wind projects around the coastline of the UK, enough to increase the country’s overall capacity built and under construction by 35% and take a significant step towards meeting the government’s ambition of fostering 50 GW of offshore wind by 2030.
The competitive nature of the scheme has continued to place downward pressure on prices – the per MWh price of offshore wind secured in this round is almost 70% less than that secured in the first allocation round, in 2015.
Onshore wind and solar energy were both included in the auction – the first time since 2015. Onshore wind secured almost 0.9 GW of new capacity, clearing at a per unit price that was more than 45% lower than in the first CfD round in 2015, while solar secured more than 2.2 GW.
The fourth round also saw developing technologies tidal stream and floating offshore wind projects successful for the first time. Tidal stream returned a capacity of 41 MW and floating offshore wind returned 32 MW.
Overall, 93 projects with existing planning permission across England, Scotland and Wales have won contracts through the competitive auction process, which is more than in all 3 previous rounds combined.
The result represents significant progress towards achieving ambitions set out in the British Energy Security Strategy, which sets out how Great Britain will accelerate the deployment of renewable technologies, with an ambition to see 95% of electricity being low carbon by 2030.