The United Kingdom’s Department for Energy Security & Net Zero (DESNZ) has unveiled the triumphant bidders in the fifth round of renewable energy project auctions. This significant milestone underscores the UK’s commitment to advancing its renewable energy sector.
Record-Breaking Capacity
The latest allocation round saw a staggering total generation capacity of 3.7 gigawatts (GW) awarded to successful projects. The report illustrates the anticipated capacity from these projects, slated for commissioning between 2025/26 and 2029/30. It is crucial to note that budget utilization hinges on wholesale price assumptions, and actual funds under the Contracts for Difference (CfD) scheme will align with real-time market prices at the time of energy generation.
The strike prices achieved in this round are above with the level that was seen in AR4. Figure 2 shows the weighted average strike prices of the AR5 projects, along with the Final Investment Decision Enabling for Renewables (FIDER)/AR1/AR2/AR3/AR4 strike prices.
Strike Prices Soar
A notable development in this round is the elevated strike prices achieved when compared to previous rounds. It also provided a comparative overview of the weighted average strike prices from the fifth auction round (AR5) projects and those from earlier rounds, including the Final Investment Decision Enabling for Renewables (FIDER), AR1, AR2, AR3, and AR4 strike prices.
Wind Dominates Renewable Portfolio
Wind energy is set to play a dominant role, comprising over 75 percent of the renewable CfD portfolio by 2030. The allocation of 3.7 GW in capacity through AR5 marks a remarkable 12.6 percent increase in the overall renewable CfD capacity, assuming all projects proceed as planned.
In terms of contract numbers, the addition of 95 new AR5 contracts expands the portfolio by nearly 58 percent. Additionally, this round witnessed the successful inclusion of geothermal projects in the CfD allocation, marking a significant milestone for this sustainable energy source.
It provided insights into the expected timeline for CfD portfolio generation up to 2030, categorized by the allocation process, including the non-competitive FIDER process and the five competitive rounds held since 2015, along with the bespoke contract for Hinkley Point C. For a detailed breakdown by technology and country, Figures 4 and 5 offer comprehensive visual representations.
The results of this latest auction round underscore the UK’s unwavering commitment to advancing its renewable energy sector, meeting its net-zero emissions targets, and fostering a sustainable future.