The Contracts for Difference (CfD) Round 4 has secured the “largest ever” amount of home-grown, cheap renewable energy at record low prices.
In all, 10.8GW of new onshore and offshore wind, solar, tidal stream and other renewables will go ahead as a result of today’s announcement by the Department for Business, Energy and Industrial Strategy (BEIS) of the winning bidders in CfD4.
This secures far more capacity than any of the previous three auction rounds, and nearly as much as the three previous rounds combined (11.26GW), according to RenewableUK.
The 10.8GW announced today represents 14% of the UK’s total current electricity capacity (75.8GW) and will power 12.5 million UK homes as well as attract £17.8bn in investment.
Nearly two-thirds of this will be new offshore wind as five projects secured 7GW of new capacity.
The cost of offshore projects remained low in this auction with strike prices of just £37.35 per megawatt hour (MWh), the lowest cost of all renewable technologies.
Solar projects will add a further 2.2GW and secured a strike price of £45.99/MWh.
Onshore wind competed in the auction for the first time since 2015, after a “long-running” campaign by RenewableUK to end its exclusion from the competitive process.
This technology’s strike price is £42.47 with projects due online within two years.
In all, 16 onshore wind projects won contracts, all of which are in Scotland, representing a total of 1.5GW.
All of the strike prices for solar, onshore wind, offshore wind and other technologies are cheaper than the current cost of electricity, which has been trading at over £150/MWh for much of this year.
The auction boosted the UK’s position as a leader in innovative new renewable energy technologies, with four tidal stream projects and one floating wind project winning CfDs for the first time.
RenewableUK deputy chief executive Melanie Onn (pictured) said: “The cost of living crisis and the war in Ukraine have pushed affordability and energy security to the top of everyone’s agenda, with billpayers desperate for relief from fossil fuel price hikes.
“Today’s record-breaking auction results show that there is a way to replace unaffordable gas with low-cost clean power generated by a wide range of renewable technologies led by wind, both offshore and onshore. Thanks to the rapid construction times of renewables, billpayers will start to feel the benefits of today’s auction next year.”
Energy UK’s deputy director of policy, Adam Berman said: “Enabling the rapid expansion required also means tackling existing barriers in the planning system and beyond so we can deliver the cheap, renewable projects that will bring down household bills without delay.”