UK Energy Secretary Ed Miliband confirmed earlier this week that the budget for this year’s renewable energy auction is being increased by £500 million (US$640 million) to over £1.5 billion (US$2 billion) to help build new green infrastructure as part of the UK government's mission to deliver clean power by 2030. This figure includes £1.1 billion (US$1.4 billion) for offshore wind, which has more budget available than all of the previous auctions combined.
Mr Miliband remarked that the previous year's auction was "a catastrophe" with zero offshore wind secured and delaying the UK's move "away from expensive fossil fuels to energy independence."
Domestic industry players 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 billpayers.
The Contracts for Difference 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 players greater certainty to invest, knowing that when electricity prices fluctuate, they will always 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 – providing value for money and affordable power for consumers.
Developers can now bid for more funding and bring forward more renewable energy projects, which will deliver the government’s 2030 clean power target while supporting local economies across the country.
Following the increase, the Allocation Round 6 (AR6) budget includes:
£1.1 billion for offshore wind, an uplift of £300 million (US$390 million)
£185 million (US$238 million) for established technologies such as onshore wind and solar, an uplift of £65 million (US$84 million)
£270 million (US$350 million) for emerging technologies such as floating offshore wind and tidal, an uplift of £165 million (US$212 million)
Last week, the government launched Great British Energy in partnership with the Crown Estate, backed by £8.3 billion (US$11 billion) of new money, which is estimated to create up to 20 to 30 GW of new offshore wind developments reaching seabed lease stage by 2030.