The UK government has announced that the CfD Budget for this year’s Contracts for Difference Allocation Round 6 (AR6) will be increased by over 50%, sending shockwaves across the energy industry.
The budget has been increased to £1.56 billion, an increase of £530 million from last year’s AR5 auction. Notably, the low strike price at the AR5 auction led to a disappointing result, with no bids for offshore wind projects being made.
The increase in financing follows calls from climate and energy think tank Ember, which warned that the UK had “three weeks to course correct” in order to meet 2030 offshore wind targets, and urged the government to increase the CfD budget for AR6 and AR7 auction rounds by at least 25%.
Research firm Cornwall Insight has calculated that the government’s 50% increase could support the addition of at least 1.2GW of new offshore wind capacity, compared to the original budget, meaning that a minimum of 4.3GW of offshore wind capacity could be expected to achieve contracts.
The news has generated broadly positive reactions across the clean energy industry. However, some caution this should not be seen as a quick fix to the UK’s clean energy capacity woes.
Hope for offshore wind
Many have expressed hope for the offshore wind auction, following the failure to secure bids in AR5.
Read more: Current+
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