The government announces the largest budget ever for the upcoming Contracts for Difference auction.
- The largest cash amount ever is provided for a renewable electricity auction to support energy security.
- £800 million is promised for offshore wind to keep Britain at the forefront of technology.
- The budget aims to increase investment in renewable energy and help the UK switch from fossil fuels to cheaper, cleaner domestic energy as it moves towards net zero.
The government is giving over £1 billion for the upcoming auction of Britain’s primary renewable energy program.
The budget for the sixth Contracts for Difference (CfD) allocation round signals substantial government support for the UK’s growing renewables sector. The Chancellor confirmed the budget during Spring Budget. This will drive further investment into the UK’s thriving renewables sector and expand the use of clean, secure, and affordable energy, contributing to economic growth.
The funding represents the government's latest effort to improve economic security and opportunity for everyone, while also safeguarding families and businesses from unstable global gas prices, as part of its plan to strengthen energy security and reduce energy bills in the long term.
After reviewing the latest evidence, the government has allocated a record £800 million for offshore wind, making this the largest round yet, with 4 times more budget available to offshore wind than in the previous round.
This step ensures that Britain remains a global leader in wind power and supports the country's ambition of up to 50GW of offshore wind by 2030, including up to 5GW of floating offshore wind.
The CfD scheme provides renewable energy projects with a guaranteed price for the electricity they generate, boosting investment in the UK which has increased renewable electricity generation from 7% in 2010 to over 40% now.
Since 2010, the UK has witnessed £300 billion of low carbon investment from both public and private sectors. An additional £100 billion of private investment is expected for the UK’s energy transition by 2030, potentially supporting up to 480,000 jobs, including 90,000 jobs in the offshore wind sector.
Separately, the Chancellor has this week confirmed additional support for the UK’s green industries. This includes an extra £120 million for the Green Industries Growth Accelerator, bringing its total funding to over £1 billion and will boost advanced manufacturing across clean energy supply chains.Energy Security Secretary Claire Coutinho mentioned:
In the area of renewables, we have made significant progress. In 2010, only 7% of our electricity came from renewables, but it has now increased to over 40%.
“The UK has the second largest renewables capacity in Europe, backed by £300 billion of investment since 2010, with an additional £24 billion since September alone..”
“We are sticking to the plan to bring the lasting change our country needs for a brighter future for Britain – securing more local, clean energy to protect billpayers from unstable gas prices..”
“Minister for Nuclear and Renewables Andrew Bowie said:“
This unprecedented funding of over £1 billion for renewables will keep the UK at the forefront of the industry.
“This announcement will ensure we provide certainty to developers and continue to attract investment in the UK.“
“I am looking forward to seeing the opportunities that will open for our top-quality renewable industries, reducing emissions and delivering reliable clean energy for the British people.“
“The CfD scheme provides important price stability for developers. The two-way design of the scheme also shields consumers and businesses from future uncertainty in the global energy market. This is because when wholesale electricity prices are higher than the agreed CfD price, generators pay back into the scheme. This was observed during Winter 2022/2023, when CfD payments reduced the amount needed to fund our energy support schemes by around £18 per typical household.“
The Allocation Round 6 budget includes:
£120 million for established technologies such as onshore wind and solar
- £105 million for emerging technologies such as floating offshore wind and geothermal, including a ringfenced £10 million budget for tidal for a second consecutive year
- £800 million for offshore wind
- CfD contracts are awarded through a series of competitive auctions, which ensure value for money for consumers. This has reduced prices since the first auction and contributed to solar and wind being amongst the cheapest form of electricity generation in the UK.
The government is making progress on the network reforms announced at last year’s Autumn Statement. This includes offering earlier grid connection dates to projects worth £40 billion, alongside transmission network companies announcing investment plans worth up to £85 billion. From next January, a new process will ensure that only projects which can show progress will be offered a connection date to join the grid.
A new public register of community benefits for transmission network infrastructure will be published to ensure developers are held accountable for delivering ambitious community benefit packages in local communities where new infrastructure is built. A new taskforce, to be chaired by Rt Hon Julian Smith CBE MP, has also been announced to help un-block disputes between landowners and electricity network operators.
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Britain To Invest $24 Billion To Capture Carbon Emissions Neil McDermot, CEO, Low Carbon Contracts Company said:
We welcome the news from DESNZ on the budget for Allocation Round 6 which has a combined total of £1,025 billion across 3 pots. As the private law counterparty for the Contract for Difference scheme, LCCC looks forward to welcoming future projects into its portfolio which currently consists of over 31GW of renewable electricity generation and 240 contracts across 12 technology types.
“The announcement today marks a positive step towards homegrown energy security and economic prosperity.“
“We are happy to be contributing to speeding up the journey to achieving net zero.“
“Dan McGrail, Chief Executive of RenewableUK said:“
We support this increase in budget, as it acknowledges that global economic conditions have changed, and it will ensure a significant amount of new offshore wind capacity and private investment, as well as generating thousands of new jobs.
“Government announces the largest ever budget for the upcoming Contracts for Difference auction round. Britain’s primary renewables scheme has received its largest ever funding boost from government, with more than…“
