Biggest ever auction secures record amount of low-cost renewable energy capacity

10.8 gigawatts of new onshore and offshore wind, solar, tidal stream and other renewables will go ahead as a result of today’s announcement by the Department for Business, Energy and Industrial Strategy of the winning bidders in CfD Allocation Round 4. This secures far more capacity than any of the previous three auction rounds, and nearly as much as the three previous rounds combined (11.26GW).

It will power 12.5 million UK homes and attract £17.8bn in investment, creating tens of thousands of highly-skilled jobs - including a further 16,000 in onshore and offshore wind. The 10.8GW announced today represents 14% of the UK’s total current electricity capacity (75.8GW).

Nearly two-thirds of this will be new offshore wind as 5 projects secured 7GW of new capacity, demonstrating that this technology is central to the UK’s transition to clean power. The cost of offshore projects remained low in this auction with strike prices of just £37.35 per megawatt hour (MWh) – the lowest cost of all renewable technologies, and significantly cheaper than the current cost of electricity, which has been trading at over £150/MWh for much of this year.

Onshore wind competed in the auction for the first time since 2015, after a long-running campaign by RenewableUK to end its exclusion from the competitive process. This technology proved yet again that it is one of the cheapest ways to generate new power, with strike prices at £42.47. These projects will start generating clean affordable electricity for billpayers within two years. The industry believes we get even more cheap capacity online if the Government sets a 2030 target for onshore wind and planning reforms are put in place to speed up decision-making, particularly in Scotland.

16 onshore wind projects won contracts, all of which are in Scotland, representing a total of 1.5GW. 44 solar projects will add a further 2.2GW.

The auction boosted the UK’s position as a leader in innovative new renewable energy technologies, with 4 tidal stream projects and 1 floating wind project winning CfDs for the first time. These projects are important stepping stones to scaling up and bringing down cost, particularly in floating wind where large-scale projects are being developed in Scotland and the Celtic Sea.

RenewableUK’s Deputy Chief Executive Melanie Onn said: “The cost of living crisis and the war in Ukraine have pushed affordability and energy security to the top of everyone’s agenda, with billpayers desperate for relief from fossil fuel price hikes. Today’s record-breaking auction results show that there is a way to replace unaffordable gas with low-cost clean power generated by a wide range of renewable technologies led by wind, both offshore and onshore. Thanks to the rapid construction times of renewables, billpayers will start to feel the benefits of today’s auction next year.

The auction also showed that the UK is maintaining its position as a world-leader in innovative renewable energy technologies like tidal stream and floating wind, which will both play an increasingly significant role in our transition to clean power to meet our net zero goal.

“To achieve this, we need to replicate the success of this auction in every subsequent annual allocation round to attract the £175bn of private investment in wind needed to achieve the Government’s 2030 targets. So it’s important that we get details of the next round as soon as possible so that developers can get projects ready for next year’s auction.

“Renewables are two to three times cheaper than the alternatives and these prices provide great value to consumers, especially in light of the impacts of inflation and global commodity costs, like steel, on the industry. The CfD has delivered a huge amount of new clean energy capacity. Now we need to see an evolution in the way contracts are awarded so that we can secure the massive supply chain and project investment needed for 2030 and beyond, as well as low and stable electricity prices for billpayers. The prize is huge: offshore wind alone is set to employ 100,000 people in the UK by the end of the decade.

Working closely with Government, we need to make this country the most attractive place to invest in. This is particularly important if we want to develop our supply chain in new technologies like floating wind, tidal stream and green hydrogen, in which we can lead the global market and seize the export opportunities this offers”.