All 99 contracts offered through the fourth Allocation Round (AR4) of the UK government’s Contracts for Difference (CfD) scheme have now been signed and returned to Low Carbon Contracts Company (LCCC).
A total of 93 individual projects across Britain will now proceed to work closely with LCCC to meet the contractual milestones specified in the CfD, supporting projects’ development and the delivery of almost 11GW of clean energy.
The variety of technologies supported through AR4 – including tidal stream and floating offshore wind for the first time, as well as established solar, onshore and offshore wind technologies – mean this round is the CfD scheme’s most diverse yet, as well as its largest, LCCC said.
The projects involved range in size from solar PV developments with an average capacity of 33.48MW, to Orsted’s 2852MW Hornsea 3 offshore wind farm.
Partners in the Hornsea 3 CfD from LCCC and Orsted came together to mark the AR4 milestone with the UK Business and Energy Secretary, Kwasi Kwarteng.
The first AR4 projects are due to come online in 2023-24.
The addition of these projects will see an 60% increase to overall CfD capacity, with projects due to power around 12 million homes.
AR4 projects’ total estimated notional monetary budget impact will be less than zero in the first three delivery years, with an increase in 2027-28 matching the steep rise in generation capacity coming online.
While money flows under the CfD are always subject to actual prices at the time of generation, the AR4 portfolio would return money to the CfD scheme at current market prices, LCCC added.
Projects must now pass their Initial Conditions Precedent within twenty working days. This contractual milestone is the first step on CfD projects’ journey to construction and operation.
LCCC chief financial officer George Pitt said: “We’re delighted to welcome these projects to the CfD portfolio and can’t wait to get to work, whether that’s with our established CfD partners or new stakeholders.
“2022 has been a landmark year for the CfD scheme, and the diversity and scale of AR4 projects proceeding is a huge mark of confidence in it.
“Amidst unprecedented times, this new generation of power projects stands to benefit communities and businesses across the length and breadth of the country, as well as well as protecting the long-term health of our environment, economies and societies.”
Orsted vice president Benj Sykes, said: “The offshore wind industry success story continues to deliver great value to the UK economy and Hornsea 3 represents another significant step forward.
“The project demonstrates how far the industry has come in terms of cost and scale and, crucially, in bringing forward projects that will deliver low cost, clean energy to households and businesses across the country.
“Orsted expects to invest a further £14billion in the UK by the end of this decade, supporting the delivery of thousands of high-quality jobs and strengthening the UK supply chain.
“We look forward to working with government and industry colleagues to accelerate the deployment of offshore wind.”