UK confirms £205M budget for next renewable energy auction but industry says more needed

£205M (US$247M) has been pledged for AR5, the first of what is now an annual auction for renewable energy capacity in the flagship contracts for difference (CfD) scheme. 

The £205M includes £170M for established technologies such as offshore wind and £10M that has been ring-fenced for tidal stream technologies. Offshore wind has been at the heart of the scheme and the UK now has the largest operational fleet in Europe and an ambition to deploy up to 50 GW by 2030, including up to 5 GW of floating offshore wind.

Minister of State for Energy Security and Net Zero Graham Stuart said, “The contracts for difference scheme is already delivering clean, homegrown energy as well as growing a green economy with green jobs.

“The announcement in the budget, the move to annual auctions and continued investment in renewable energy will limit the impact of events like Putin’s illegal war in Ukraine and drive our overriding priority for the UK to have among the cheapest wholesale electricity prices in Europe.

“I am excited to see the opportunities that will open for Britain’s world-class renewable industries as annual auctions kick off this year, enhancing the UK’s reputation as among the most attractive places to invest in for a secure, affordable and prosperous future.”

Responding to the announcement, RenewableUK warned that the plans set out by the Government for this year’s round of auctions “will not maximise investment in wind, solar and tidal projects.” 

RenewableUK economics and markets manager Michael Chesser said, “Unfortunately, in the light of global inflationary pressures, the budget and parameters set for this year’s CfD auction are currently too low and too tight to unlock all the potential investment in wind, solar and tidal stream projects which the industry could deliver.

“Concerns about energy bills and energy security are at a record high, so the UK should be trying to maximise investment in low-cost clean energy, to provide relief for billpayers who’ve been hit hard by massive spikes in global gas prices over the past year. 

“At a time when the US and EU are bending over backwards to offer incentives for developers to build new projects, the UK is sending the wrong investment signals.

“As a result, we risk losing vital opportunities to scale up our supply chains around the UK, denying communities the industrial-scale benefits which our sector offers. We are also jeopardising our global lead in cutting-edge clean energy technologies like floating wind and tidal stream.

“We are calling for the Government to revise the CfD budget so that we can stay on track to deliver on our renewable energy targets, as well as creating tens of thousands of high-quality green tech jobs and attracting billions in private investment in the years ahead.”