The sixth auction round (AR6) for the Contracts for Difference (CfD) scheme will have a budget of £1.5 billion after Ed Miliband announced a £500 million increase today (30 July).
It is the largest ever budget for the scheme and includes £1.1 billion for offshore wind, assigning it more budget than in all of the previous auction rounds combined. The Labour Party, which views offshore wind as “the backbone of the UK’s clean energy mission”, says the move will send a strong signal to industry to invest in UK waters.
Energy Secretary Miliband said: “Last year’s auction round was a catastrophe, with zero offshore wind secured, and delaying our move away from expensive fossil fuels to energy independence.
“Instead, we are backing industry to build in Britain, with this year’s auction getting its biggest budget yet. This will restore the UK as a global leader for green technologies and deliver the infrastructure we need to boost our energy independence, protect billpayers, and become a clean energy superpower.”
The budget further includes an uplift of £65 million for onshore wind and solar, bringing the total available up to £185 million. There is £270 million available for emerging technologies such as floating offshore wind and tidal, an uplift of £165 million.
According to Energy Minister Michael Shanks, the budget increase will boost industry confidence. This round’s budget is seven times higher than the previous auction round (AR5).
AR5 had only £227 million funding, awarding contracts to just 3.7GW of projects. This included solar power and onshore wind projects and the first geothermal plants to benefit from the scheme, but nothing was allocated to offshore wind.
Keith Anderson, CEO of ScottishPower, said: “The auction needed a reset after last year and we welcome the increased budget, which is an important investment signal to the industry to make Britain a clean energy superpower, secure more low-cost offshore wind and spur economic growth.
“This will unlock billions in private investment, support thousands of jobs, strengthen our energy security and produce the green and affordable power needed for decades to come.”
When the general election was announced in May, Anderson called for a “green light for growth”. ScottishPower has awarded over £1 billion in supply chain contracts to over 550 companies so far this year and has also invested £1.1 billion into the energy industry
Chief executive of trade association Energy UK, Emma Pinchbeck, said: “Offshore wind is critical to hitting the Government’s 2030 target and we know that the vast majority of this capacity must be delivered through this auction round and next year’s. That remains a huge challenge but this is certainly a big step in the right direction and another welcome demonstration of the Government’s ambitions.”
