Renewable energy projects totalling 3.7 GW, with no offshore wind at all, have been awarded funding in the latest round of the UK government’s Contracts for Difference (CfD) scheme.
The fifth CfD auction saw 1,927.68 MW of solar projects and 1,480.74 MW of onshore wind win contracts at strike prices of GBP 47 (USD 58.6/EUR 54.7) and GBP 52.29, respectively. There was one successful remote island wind project, SSE Renewables’ Viking Wind Farm, which secured funding for 223.6 MW of its capacity at the same price as onshore wind.
The auction will also back a record 11 tidal projects with a combined capacity of 53 MW. The tender round had GBP 10 million of its overall budget of GBP 227 million ringfenced for tidal stream. For the first time, the geothermal technology has been successful in the CfD scheme with three projects totalling 12 MW.
The government highlighted that there was a record number of winning projects, 95, up from 93 in the previous round.
Offshore wind, however, was a big miss. The fourth CfD round secured nearly 11 GW of clean energy, including almost 7 GW of offshore wind.
“While offshore and floating offshore wind do not feature in this year’s allocation, this is in line with similar results in countries including Germany and Spain, as a result of the global rise in inflation and the impact on supply chains which presented challenges for projects participating in this round,” says today’s statement by the Department for Energy Security and Net Zero.
Non-profit organisation New Energy and Climate Intelligence Unit (ECIU) said on Thursday that due to the government’s failure to adjust the administrative strike price, which caps CfD bids, to reflect inflation, none of the UK’s 5 GW of ‘shovel-ready’ offshore wind projects appeared to have submitted bids in the auction. It recently warned this would lead to missed savings to billpayers.
Announcing the auction outcome, the government confirmed its ambition to build 50 GW of offshore wind by 2030, including up to 5 GW of floating wind. It said it is already preparing for the sixth auction round in 2024 and looks forward to the participation of offshore and floating offshore wind.
Industry body RenewableUK today called for urgent government action to rebuild investor confidence in the UK offshore wind market. It said that so far, only 27 GW has been secured of the government’s 50 GW offshore wind target for 2030, meaning that future auctions will need to support 4.5 GW-5.8 GW a year to reach the target.
“Industry has warned that rising costs should have been properly priced into this auction. If the UK isn’t offering prices that allow investors to make a return, they will simply invest elsewhere. These results should set alarm bells ringing in Government, as the UK’s energy security and net zero goals can only be met if we have offshore wind as the backbone of our future energy system,” said RenewableUK chief executive Dan McGrail.
Source: renewablesnow
