UK Govt to launch next green energy CfD round in March 2023

A new round of Contracts for Difference (CfD) will open in spring next year, the UK Government has confirmed.

From March 2023, renewables developers will be able to bid for deals that will guarantee a long-term price for their green energy.

The Department for Business, Energy and Industrial Strategy (BEIS) published details about the fifth allocation round (AR5) on Wednesday.

In the most recent auction round, AR4, a record 11 gigawatts (GW) of consented capacity was awarded state backing.

Overall, 93 projects with existing planning permission across England, Scotland and Wales won contracts.

That is more than in all 3 previous rounds combined.

Consultation opens

A consultation on the future of the scheme, Westminster’s flagship mechanism for supporting renewables projects, has also been launched.

Views are being sought on a number of points, including potential amendments for allocation round 6 and beyond – it will run until February 7.

© Supplied by Pinsent Masons

Among the key AR5 documents published by BEIS is the core parameters, which confirms the pot structures, administrative strike prices and delivery year.

A final budget notice will be issued in March 2023 when the auction launches.

It will be the first CfD round to run on an annual basis, a key ask of industry, in line with the government’s commitment to quicken the pace of the rollout of new renewable energy projects.

Process tweaked to reflect frequency

To ensure auction delivery on an annual basis, important updates to the design have been confirmed in the core parameters.

They are designed to ensure the scheme remains competitive and delivers maximum renewable deployment and value for money.

AR5 will feature two auction pots, with offshore wind now competing alongside other established technologies.

This change acknowledges the “great success of offshore wind in the UK”, which is now competitive with other renewable technologies, BEIS said.

A two-pot structure will support competition in AR5 to drive efficient and long-term support for low-carbon generation.

UK minister for energy and climate, Graham Stuart said: “Last year’s Contracts for Difference scheme secured a record amount of clean, homegrown energy, and continues to deliver green growth across the country.

“Today’s update to the scheme’s design provides further clarity for renewable project developers investing in new low carbon technologies.

“I look forward to 2023 as the UK reinforces its role as a world-leader in renewable electricity, creating green jobs, reducing emissions and boosting energy security across the country.”