Annual CfD auctions to speed renewable power

The Government has announced that it will be holding Contracts for Difference (CfD) auctions annually, to accelerate the UK’s adoption of renewable power and improve energy security.

The next CfD round will open in March 2023 and be renewed every year instead of every two years that they have been held since their induction in 2014. It is hoped that this will help accelerate the estimated £90bn of private investment in renewables by 2030. A draft budget of £285mhas been set for the fourth CfD round, comprising £10m for Pot 1, £75m for Pot 2 and £200mfor offshore wind (Pot 3).

In the Net Zero Strategy, the Government committed to accelerating the deployment of low-cost, low-carbon electricity generation by reviewing the frequency of the CfD auctions underlining a commitment to accelerate low carbon electricity generation to achieve a fully decarbonised electricity system by 2035.  

The auction scheme has already helped reduce the per unit price of offshore wind by around 65 per cent since the first auctions were held and aided the UK in becoming one of the world’s largest generators of wind power.

In the last allocation round, 12 new contracts were awarded, with the potential for nearly 6GW of further capacity. Increasing the frequency of auctions will also give more projects the opportunity to enter the system, helping to scale-up the UK’s supply of renewable energy and to support the country’s long-term energy security.

Business and Energy Secretary Kwasi Kwarteng said: “We are hitting the accelerator on domestic electricity production to boost energy security, attract private investment and create jobs in our industrial heartlands. The more clean, cheap and secure power we generate at home, the less exposed we will be to expensive gas prices set by international markets.”

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