Wide range of projects win contracts to generate clean power in latest clean energy auction

3 September 2024 - RenewableUK press release

The latest annual auction for Contracts for Difference to generate clean power has secured 9.6 gigawatts (GW) of new renewable energy capacity for the UK, including support for the world’s largest floating offshore wind farm.

The 131 projects which have won contracts in Allocation Round 6 will power nearly 11 million homes and attract over £14bn of new private investment into the economy. The first projects will start generating electricity in 2026.

The announcement shows that investor confidence in the UK market is returning after the failure of last year’s auction, which attracted no bids from offshore wind projects. Today, 9 offshore wind projects totalling 4.9GW have secured contracts at a cost of £54-59 per megawatt hour (MWh). The price is in line with other recent auctions globally and reflects the dual impacts of inflation and financing costs due to high interest rates.

22 onshore wind projects (990MW) were successful this year at £50.90/MWh, confirming that it is one of the UK’s cheapest sources of new power, along with 3.2GW of solar capacity at a similar price.

Power generated by the successful projects will save nearly £3bn a year compared to the alternative cost of gas by 2030. This reinforces the findings of our recent report by Aurora Energy Research, which shows that an electricity system which is dominated by offshore wind will be cheaper for billpayers than alternatives, such as burning more gas or importing power from abroad via interconnectors.

Among the winning projects is Green Volt, which at 400 megawatts (MW) will become the world’s largest floating wind farm – over four times bigger than the largest floating project operating today. Floating wind is set to play a vital role in boosting the UK’s energy security into the next decade, and is an industrial opportunity in which the UK can be a world leader. The industry has called for support for early-stage floating wind projects to unlock investment in scaling up the technology and developing the supply chain in a sector that could support tens of thousands of jobs in the years ahead.

The auction also saw the UK extend its global leadership in marine energy as 6 new tidal stream projects totalling 28MW secured contracts in Scottish and Welsh waters.

RenewableUK’s Chief Executive Dan McGrail said:

“The success of today’s auction sends a clear signal that the UK is back in the global race for clean energy investment. This wide range of projects, across technologies, are vital steps in building a clean, affordable energy system and reducing our dependence on expensive fossil fuels.

After the failure of last year’s offshore wind auction, it was essential that this auction succeeded and the fact that nine major offshore wind projects have secured contracts will increase investor confidence. There is intense global competition in offshore wind and the next auctions will be crucial for the UK.

“The Government has set a world-leading clean power mission for 2030 and to meet that will need a big step-up from today. The industry stands ready to work with Government to make sure that we’re increasing the amount of new renewables coming through each year to the levels needed to meet the clean power mission”.

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Notes

For further information, contact

Robert Norris, Head of Communications
07969 229 913 Robert.Norris@RenewableUK.com

1. RenewableUK’s members are building our future energy system, powered by clean electricity. We bring them together to deliver that future faster; a future which is better for industry, billpayers, and the environment. We support over 490 member companies to ensure increasing amounts of renewable electricity are deployed across the UK and to access export markets all over the world. Our members are business leaders, technology innovators, and expert thinkers from right across industry.
   
   


2. More details on the report by Aurora Energy Research are available here.
   
   


3. RenewableUK’s events programme is available here.
   
   


4. The 9.6GW of new capacity announced today represents 9% of the UK’s total current electricity capacity (107.5GW).
   
   There is 15GW of offshore wind currently operational and the Government has a goal to quadruple this by 2030. A further 15.5GW of onshore wind is operating in the UK.
   
   


5. The strike price for offshore wind in AR6 represents a 49% reduction compared to the first CfD auction in 2015. Onshore wind and solar prices are down by 36% compared to the first CfD round.
   
   


6. CfD strike prices are expressed in 2012 terms. Inflated to current prices, the AR6 strike prices are: onshore wind & solar £70-71/MWh, and offshore wind £75-82/MWh. The strike price of new nuclear generation is £128/MWh. The current wholesale electricity price is £84/MWh (source: Ofgem)