The Government has secured a record number of renewable energy projects as part of its latest auction, with 131 projects confirmed by the Department for Energy Security and Net Zero.
The sixth Contract for Difference (CfD) auction, which was bolstered by a 50% increase in its budget from the new Labour administration, achieved bids on a variety of projects including solar, onshore wind, and notably, offshore wind and floating wind farms.
The success of the latest round will be seen as a major boost to Labour’s net zero agenda, after the disastrous fifth CfD auction under the Conservative Government failed to secure a single offshore wind project.
According to the new Labour Government, the success of the latest auction was largely thanks to the increased budget, which it said resulted in competitive pricing, leading to lower costs for consumers.
The new projects, which will generate 9.6 GW of power at compelling prices, mark a critical step towards the UK’s energy independence and bolster its energy security amidst volatile global fossil fuel markets. Notably, the auction included nine offshore wind contracts, renewing momentum in this sector with Europe’s largest wind farm projects, Hornsea 3 and Hornsea 4, and the pioneering Green Volt floating wind project.
Ed Miliband, Energy Security and Net Zero Secretary, highlighted the strategic importance of the latest round, “Today we have now achieved a record-setting round for enough renewable power for 11 million homes, essential to give energy security to families across the country. It is another significant step forward in our mission for clean power by 2030 – bringing Britain energy independence and lower bills for good.”
Michael Shanks, Energy Minister, also noted the economic benefits, “Securing new wind turbines, solar panels and cutting-edge technologies such as tidal will boost growth, catalyse investment and support good jobs across Great Britain.”
Has this round been a rousing success?
Despite securing a record number of renewable energy projects, the sixth CfD auction has actually secured less capacity than its 2022 counterpart, where 11 GW was secured. While 9.6 GW is definitely an improvement over the 3.7 GW secured in 2023, some industry insiders remain concerned that the auction process isn’t securing enough capacity to meet the UK’s ambitions of generating 100% of its electricity from clean energy by 2030.
Ami McCarthy, Greenpeace UK’s political campaigner, noted, “The Government clearly needs to take a hard look at how this system is working. 5 GW of offshore wind is of course welcome, but it is only about half of what is required each year to meet the Government’s 2030 target. The last renewables contract auction was a catastrophic failure, and in fact the biggest disaster for clean energy in almost a decade. Because of this, the new government has an uphill battle.”
Emma Pinchbeck, Chief Executive of Energy UK, remains optimistic, however, commenting, “Allocation Round 6 represents a crucial step in the journey to clean power by 2030. As we recover from an energy crisis caused by our exposure to international fossil fuel prices, it’s more important than ever that we build a clean energy system that can ensure our energy security and protect homes and businesses across the country from unaffordable energy bills. This is by far the cheapest way to power the UK.
“Today’s record-breaking result shows that the Contracts for Difference programme is once again fit for purpose. Building on AR6’s success will mean delivering next year’s auction on time, and maintaining an auction design that ensures both investor confidence and value for customers.”
