The UK has 8GW of onshore wind and solar projects primed for the next Contracts for Difference (CfD) round, a report shows.
The latest figures from Cornwall Insight’s Renewables pipeline tracker shows that both the onshore wind and solar pipeline have grown.
The consultant calculates CfD Allocation Round 4 (AR4) eligible pipeline capacities for solar and onshore wind of up to 3GW and 5GW respectively, both figures up on the same period last year.
Further analysis also shows at least a further 6GW of solar PV capacity is in the grid connection queue and not yet in planning.
James Brabben, Head of Assets and Infrastructure at Cornwall Insight, said: “With around four months to go until eligibility deadlines, the pipeline could increase further, especially from solar PV with its typically quicker lead times for planning approval.
“By December, we could therefore have a record level of new-build renewables looking to bid into the CfD round, creating some interesting decisions for new-build plants.
“Depending on budget and MW cap parameters in the auction, some projects may deem it unlikely they will be competitive in the CfD. As a result, they may look to alternative routes to market options such as utility Power Purchase Agreements (PPAs) or Corporate PPAs (CPPAs).
“Some generators may also look to find an edge by incorporating other revenues, including those available through balancing services markets or different business models such as co-location with batteries.
“Although there are alternative options available to new build generators, these are still challenging, and the bankability of the CfD contract is likely to incentivise solar and onshore wind generators to bid into the AR4 process. The lack of costs or bid bonds in AR4 participation would also support this view, with generators potentially seeing the auction as a “free hit” to enter and find out if prices materialise at a level suitable for their project returns.
“We, therefore, expect very high levels of auction competition and a potential stalling in the development of other routes to market options such as utility PPAs and CPPAs if generators crowd the CfD and only look at alternatives post-auction in spring/summer 2022.”