Increased funding for new green infrastructure will accelerate the delivery of clean, cheap, low-carbon electricity to families and businesses, generated by renewable energy technologies such as wind turbines and solar panels.  

At the end of July, it was announced that the budget for this year’s renewable energy auction is increasing by £500 million to over £1.5 billion.

This includes £1.1 billion for offshore wind – the backbone of the UK’s clean energy mission –  which has more budget available than all of the previous auctions combined, sending a strong signal to industry to invest in UK waters, as the government continues its drive towards delivering clean power by 2030.

Energy Secretary Ed Miliband said: “We are backing industry to build in Britain, with this year’s auction getting its biggest budget yet. This will restore the UK as a global leader in green technologies and deliver the infrastructure we need to boost our energy independence, protect billpayers, and become a clean energy superpower.

“Industry will now bid for a share of the funding through the government’s sixth renewable auction – known as the Contracts for Difference scheme – which provides developers with initial subsidies for clean electricity projects across Britain with a built-in design to keep costs low for billpayers.” 

What is the Contracts for Difference scheme?

The Contracts for Difference scheme works by developers bidding for contracts to help deliver renewable energy projects, with the scheme providing a guaranteed price for the clean electricity they generate. This gives the industry greater certainty to invest, knowing that when electricity prices fluctuate, they will always get a set price for their projects. 

The scheme’s design awards contracts through a series of competitive auctions, where the lowest price bids are successful – providing value for money and cheap power for consumers.

Following the increase, the Allocation Round 6 (AR6) budget includes: 

  • £1.1 billion for offshore wind, an uplift of £300 million
  • £185 million for established technologies such as onshore wind and solar, an uplift of £65 million
  • £270 million for emerging technologies such as floating offshore wind and tidal, an uplift of £165 million
  • The increase means the AR6 budget is 7 times higher than that of Allocation Round 5 (AR5).

Now the budget has been set, the auction will take place in August with successful projects to be announced in September 2024.

Responding to the government’s announcement on the next Contracts for Difference auction round (AR6), Energy UK’s chief executive, Emma Pinchbeck said: “It’s a real boost for our clean energy ambitions that the upcoming auction round will now be able to deliver more renewable power. The sooner we can get new wind and solar projects up and running, the sooner we can boost our energy independence with clean, homegrown power that reduces our reliance on expensive foreign gas and helps protect us from a repeat of the price shocks that have hit customers hard in recent years.

“Offshore wind is critical to hitting the government’s 2030 target and we know that the vast majority of this capacity must be delivered through this auction round and next year’s. That remains a huge challenge but this is certainly a big step in the right direction and another welcome demonstration of the government’s ambitions.

“As the latest figures show, renewables supplied almost half of the UK’s power in 2023 so we’ve already seen what can be achieved – not just through generating clean energy but also how such projects can bring investment, growth, and high-quality jobs to all parts of the country, boosting local economies and supply chains.”