During the Spring Budget announcement yesterday (6 March), chancellor of the exchequer Jeremy Hunt revealed that the budget for the 2024 Contracts for Difference (CfD) auction will be set at over £1 billion.
Later confirmed by the Department for Energy Security and Net Zero (DESNZ), the budget for Auction Round 6 (AR6) will be the “largest ever” set at £1.025 billion.
Due to open on 27 March 2024, funding for AR6 will be split into technology groups dubbed ‘pots’. These are as follows:
- Pot 1 (£120 million budget): Energy from Waste with CHP, Hydro (>5MW and <50MW), Landfill Gas, Onshore Wind (>5MW), Remote Island Wind (>5MW), Sewage Gas, and Solar Photovoltaic (PV) (>5MW).
- Pot 2 (£105 million budget): Advanced Conversion Technologies (ACT), Anaerobic Digestion (AD) (>5MW), Dedicated Biomass with CHP, Floating Offshore Wind, Geothermal, Tidal Stream, Wave.
- Pot 3 (£800 million budget): Offshore Wind.
This is a colossal increase to the AR5 budget, which was set at £227 million even after receiving a £22 million increase from its initial budget.
Despite this comparatively low budget, AR5 was a great success for solar, with 56 solar projects collectively securing almost 2GW (1,928MW) of the 3.7GW of capacity awarded.
As a whole, however, AR5’s low budget and strike prices meant that no offshore wind projects bid in the auction, causing the UK to miss on a huge opportunity to bolster it’s renewable capacity. The government is continuing to show signs of trying to ensure the mistakes of AR5 are rectified, including raising the strike prices for all technologies allowed to bid in the auction resulting in a 30% increase for solar from £47/MWh to £61/MWh.
“The government has taken a major step in the right direction today by quadrupling the available budget – a clear statement of intent in ramping up the ambition to bring cheaper, greener energy onto the system quickly,” said Keith Anderson, CEO at energy company ScottishPower.
“I expect the auction to be hugely competitive. Given the scale of the available pipeline, there is always the opportunity to go further, and so we would encourage the government to revisit the budget in the light of developments.”
Little regard paid to solar
Aside from the significant CfD AR 6 increase, Gemma Grimes, director of policy and delivery at Solar Energy UK expressed her disappointment that yesterday’s Spring Budget was “virtually nude of anything to bolster one of the UK’s fastest growing sectors: solar power.”
Instead Grimes looked towards the Green Jobs Plan, expected later this month, and urged for the legislation to provide a “firmer vision of how to grow the industry by addressing the lack of critical skills in the workforce. This is holding back deployment of the UK’s cheapest source of electricity.”
Part of this article was taken from our sister site Current±.