United Kingdom

United Kingdom

UK plans annual CfD tender rounds for wind and other renewables

Industry welcomes acceleration of tender rounds as developers show 'huge appetite' to build renewables projects

ScottishPower's 714MW East Anglia One project was one of the offshore wind farms successful in the UK's first CfD tender in 2015
ScottishPower's 714MW East Anglia One project was one of the offshore wind farms successful in the UK's first CfD tender in 2015

The UK is to double the frequency of renewable energy tenders, by holding contract for difference (CfD) auctions every year, rather than every other year.

The department for business, energy and industrial strategy (BEIS) announced that the next CfD round will open in March 2023, and will be the first in a series of annual auctions.

Since the first auction round was held in 2015, contracts have been allocated to around 16GW of low-carbon electricity capacity in CfD tenders, including around 13GW of offshore wind capacity.

Prices for offshore wind have also tumbled – from a low price of £114.39/MWh in the first tender to a low of £39.65/MWh in the 2019 round.

Onshore wind was barred from competing in the UK's second and third tenders, but was readmitted for the fourth tender round, which was opened last year. Results are yet to be announced, but a RenewableUK spokesman told Windpower Monthly he expected them in the first half of 2022. In the most recent round, both onshore and offshore wind were eligible to compete, as were solar, hydropower and other technologies.

BEIS is yet to confirm which technologies will be eligible to compete in the forthcoming annual tenders. It is also yet to confirm which technologies will compete against each other in separate pots, or how big the budget allocated to the tenders will be.

Dan McGrail, chief executive of industry body RenewableUK said: “Moving to annual CfD auctions is a major step forward which will significantly accelerate the speed of our nation’s transition to net zero.

“There’s a huge appetite among renewable energy developers to invest in building more projects, which will help to grow the UK supply chain at a faster rate.”

This “huge appetite” for developers to build more projects was recently demonstrated in Scotland’s recent offshore wind leasing round. Seabed leases were awarded that developers estimate could deliver up to 24GW of new offshore wind capacity – more than double the capacity initially expected.

RenewableUK’s McGrail added that the UK needs to build about 4GW of offshore wind capacity annually to help reach net zero, which means a quadrupling of its annual rate.

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