UK Energy secretary Ed Miliband announced on 31 July that the budget for this year’s renewable energy auction is being increased by £500 million to over £1.5 billion – a record figure – to help build new green infrastructure as part of the government’s aim to deliver clean power by 2030.

The funding is intended to accelerate the delivery of clean, cheap, low-carbon electricity to families and businesses, generated by renewable energy technologies such as wind turbines and solar panels.  

This includes £1.1 billion for offshore wind – the backbone of the UK’s clean energy target – which has more funding available than all of the previous auctions combined, sending a strong signal to industry to invest in UK waters.  

The uplift comes on the day of the first meeting of the Clean Energy Mission Board – chaired by the Energy secretary and attended by ministers from across Whitehall – as part of plans for a ‘mission-driven’ government. The board will meet to ensure a relentless focus on delivering the mission of clean power by 2030 and accelerating towards net zero.

Energy Secretary Ed Miliband said: “Last year’s auction round was a catastrophe, with zero offshore wind secured, and delaying our move away from expensive fossil fuels to energy independence. Instead, we are backing industry to build in Britain, with this year’s auction getting its biggest budget yet. This will … deliver the infrastructure we need to boost our energy independence and protect bill–payers”.

Industry will now bid for a share of the funding through the government’s sixth renewable auction – known as the Contracts for Difference scheme – which provides developers with initial subsidies for clean electricity projects across Britain with a built-in design to keep costs low for bill–payers. 

These subsidies are paid back when wholesale electricity prices are higher than the agreed Contract for Difference price. This was seen over winter 2022/2023, when CfD payments reduced the amount needed to fund government energy support schemes by around £18 per typical household. 

The scheme’s design means the central government’s budget will not be impacted, following findings from a Treasury spending audit revealed £22 billion of unfunded pledges inherited from the previous government.

Overall, the funding uplift represents more than a 50% increase on the budget previously set in March, supporting high quality jobs in industrial heartlands and coastal communities, while protecting household bills from volatile fossil fuel prices.

The CfD scheme works by developers bidding for contracts to help deliver renewable energy projects, with the scheme providing a guaranteed price for the clean electricity they generate. This gives industry greater certainty to invest, because when electricity prices fluctuate, they will get a set price for their projects. The scheme’s design awards contracts through a series of competitive auctions, where the lowest price bids are successful.

Budget details

Following the increase, the Allocation Round 6 (AR6) budget includes: 

  • £1.1 bn for offshore wind, an uplift of £300 million;
  • £185 m for established technologies such as onshore wind and solar, an uplift of £65 million;
  • £270 m for emerging technologies such as floating offshore wind and tidal, an uplift of £165 million.

The increase means the AR6 budget is 7 times higher than that of Allocation Round 5. Now that the budget has been set, the auction will take place during August with successful projects to be announced in September 2024.