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Fourth Contracts for Difference auction opens with £285m of funding on offer

The CfDs are expected to provide support for Britain's 40GW offshore wind target.

The CfDs are expected to provide support for Britain's 40GW offshore wind target.

The fourth round of the Contracts for Difference (CfD) auction has opened, with a target of 12GW of electricity capacity set to gain £285 million of funding.

Offshore wind will be supported by £200 million funding a year through the scheme, including £24 million that is ringfenced for floating offshore wind. Meanwhile, £20 million is available for tidal stream projects, and £10 million for solar and onshore wind technologies, which are being included in the scheme for first time since 2015.

“Our biggest ever renewables auction opening today will solidify the UK’s role as a world-leader in renewable electricity, while backing new, future-proof industries across the country to create new jobs,” said Business and Energy Secretary Kwasi Kwarteng.

“By generating more renewable energy in the UK, we can ensure greater energy independence by moving away from volatile global fossil fuel prices, all while driving down the cost of new energy.”

Pot one technologies – onshore wind and solar – within first allocation round (AR) four will have a 5GW capacity cap, as well as a maximum capacity limit of 3.5GW for both technologies.

The second pot is made up of less-established technologies, including floating offshore wind, tidal stream, geothermal and wave, and has no capacity cap. Pot three is for offshore wind, and also has no capacity cap.

AR4 is the biggest CfD auction so far and is expected to provide a significant step forwards for the government’s ambition of 40GW of offshore wind by 2030, which includes 1GW of floating offshore wind. This was set out in the Ten Point Plan for a Green Industrial Revolution, unveiled in 2020.

“The Contracts for Difference scheme is proof that green and growth go hand-in-hand as it continues to be a key driver behind the world-leading renewable energy sector that is providing us with secure clean energy, creating jobs across the UK and opening investment and export opportunities,” Energy and Climate Change Minister Greg Hands said.

“The previous 3 rounds have allowed us to push forward with the Green Industrial Revolution and this round will take us further and faster than ever before while continuing to drive down costs for consumers.”

AR4 will close to applications on 14 January 2022, ahead of the final auction results being announced in the spring/summer, the government said.

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