The British government confirmed the budget for this year’s Contracts for Difference auction, bolstering energy security.

Britain’s rollout of clean, affordable, homegrown energy is proceeding at full speed, with the government offering £205 million in its latest renewables auction, bolstering energy security, expanding our economy, and supplying more of Britain’s energy needs from domestic sources.

The Contracts for Difference scheme is the government’s flagship mechanism for supporting new low-carbon electricity generation projects in the UK, with nearly 27GW of low-carbon capacity awarded. 

This has accelerated plans to diversify, decarbonise, and domesticise our energy supplies, with the last round (AR4) securing nearly 11GW of low carbon capacity – enough to power 12 million British homes.

The announcement of a budget of £205 million for the fifth CfD allocation round – the first annual CfD auction – confirms another year of substantial government financial support for green industries and jobs. 

This will help support green energy and future jobs, level the playing field in the UK, and replace expensive fossil fuels with cheaper domestic energy sources.

This includes £170 million for established technologies ensuring Britain remains a global leader in offshore wind, and £10 million ring-fenced budget for tidal stream technologies, enabling the UK to develop a thriving tidal power industry.

Since the first auction, the Contracts for Difference program’s competitive nature has put downward pressure on prices. 

This process, coupled with the fact that solar and wind are now among the cheapest forms of electricity generation in the UK, means that the scheme will play an increasingly vital role in achieving the Energy Security Secretary’s goal of having Britain’s wholesale electricity prices rank among the lowest in Europe.

Graham Stuart stated: “Our Contracts for Difference programme already delivers clean, domestic energy and fosters a green economy with green jobs.” “The announcement of today’s budget and continued investment in renewable energy will mitigate the effects of events such as Putin’s illegal invasion of Ukraine and drive our overriding objective for the UK to have the cheapest wholesale electricity prices in Europe.”

This year’s annual auctions will enhance the UK’s reputation as one of the most attractive investment destinations for a secure, affordable, and prosperous future.

The government of the UK continues to support the deployment of renewable energy across the entirety of the UK. To date, 52 contracts have been awarded to renewable energy projects in Scotland, representing approximately 30% of all CfD projects and 25% of total CfD capacity.

The scheme has awarded contracts for nine projects totaling approximately 260MW in Wales.

The scheme is intended to be equitable and deliver low carbon deployment at low cost to consumers, with generators paying back the difference when wholesale electricity prices exceed the price agreed upon in the CfD. Offshore wind has been central to the scheme, and the industry is a major success story in the UK due to the country’s flagship CfD programme. The UK has the largest fleet in Europe and the four largest individual wind farms worldwide.

As the British Energy Security Strategy outlines, the UK is expected to generate electricity from offshore wind to power every home by 2030, attracting vital investment to coastal communities and supporting 90,000 direct and indirect jobs.

The CEO of the Low Carbon Contracts Company (LCCC), Neil McDermott, stated: “We welcome the government’s announcement regarding CfD Allocation Round 5.”

Government announces substantial financial support for the first annual flagship renewables auction, bolstering the energy security of the UK.

£170 million was pledged for established technologies to ensure Britain’s renewable energy leadership, and £10 million was budgeted for tidal energy. The scheme will increase annual investment in the sector, delivering clean, domestic energy, green growth, and employment.