UK government ministers are reportedly drafting plans for the UK’s largest-ever renewable energy procurement auction.
Tomorrow (13 December), energy secretary Ed Miliband will launch the “Clean Power 2030 Action Plan”, which will explore how the UK government will meet its ambitious target of complete decarbonisation of the energy system by the year 2030. The Financial Times has reported that, according to anonymous government sources, one of the plans dominating the discussion is a major increase to the Contracts for Difference (CfD) budget in 2025, following the success of this year’s auction round six (AR6) procurement round.
AR6 was arguably the most successful CfD procurement round the UK has seen since the scheme was launched, with a last minute £500 million budget increase from the new Labour government bringing the total budget to £1.5 billion, the highest amount ever seen for a CfD funding round. A record 131 clean energy projects were awarded CfD contracts in AR6, with a total capacity of 9.6GW. Around 1.1GW of the awarded capacity went to offshore wind projects, making up for what Miliband referred to as a “disastrous” AR5 round in 2023, which saw zero bids for offshore wind projects due to unattractive prices on offer.
The Labour Party’s debate on the future of the CfD scheme comes shortly following the National Energy System Operator’s (NESO) Clean Power 2030 advice. The report notes that in order to achieve the 95% carbon reductions for the energy system set out in Labour targets by 2030, the UK will need to bring its offshore wind capacity up from today’s 15GW to between 43-50GW, with onshore wind requiring growth from 14GW to 27GW, and solar capacity needing to treble, from 15GW to 47GW.
Some have argued that the NESO’s solar projections aren’t enough, with our sister publication Solar Power Portal reporting that Solar Energy UK believes that a target of closer to 60GW is more useful.
Responding to this reveal, Katie Williams, partner at global law firm Ashurst, said: “This is another ambitious play in the bid to accelerate the drive towards Net Zero and will be viewed by many as a positive move, though the market will keenly await the details of Clean Power 2030 Action Plan [on Friday]. As the 2030 timeline is fast approaching, there is a lot for the government and the energy sector to balance and this boost is very welcome. As always, the key will be implementation.”
