Osborne announces £730 million for renewable energy auctions

Chancellor George Osborne has trailed a commitment of £730 million for Contracts for Difference (CfD) auctions during Wednesday’s budget speech.

The fresh auctions will only be open to offshore wind and other less established technologies. Depsite solar PV's continuing cost reductions, it is classed as a more mature, established technology. Offshore wind is classed as less established. There is 5GW of installed offshore wind capacity in the UK and industry body RenewableUK lists a further 13.8GW of consented projects. Offshore wind also expects future cost declines.

The auction will cap the price per MWh at £105 in the first auction and £85 for projects commissioned in 2026. 

The government committed to providing no new support for onshore wind and Secretary of state Amber Rudd said in February that there would be no new solar auctions under the contracts for difference scheme.

"The budget does not change the current government's narrative on renewables and low carbon," said Chris Towner, Oil and Gas partner at Bond Dickinson LLP. "The allocation of £730m for support for projects that begin exporting power in the period beyond 2021 is helpful in that it gives the first piece of certainty that some support beyond 2021 will be available.  

"On the other hand, when compared with the levy control framework cap of £9bn for projects that start generation in the period up to 2021, it implies a substantial slowdown in the likely rate of deployment for renewables and low-carbon technologies," he added.