The UK government has announced an increase in the maximum price for offshore wind projects to ensure the effectiveness of the Contracts for Difference (CfD) program.
The maximum strike price for offshore wind projects has been increased by 66% to £73 (~$90)/MWh. Floating offshore wind projects will also increase by 52% to £176 (~$218)/MWh.
The maximum price for solar projects will go up by 30% to £61 (~$75)/MWh.
These adjustments are set to take effect in the upcoming CfD Allocation Round 6 scheduled for 2024.
In addition to the adjustments for offshore wind, the government is increasing maximum bid prices for other renewable technologies, offering certainty for developers and ensuring the UK remains at the forefront of clean energy innovation. These adjustments include a 32% increase for geothermal projects to £157 (~$194)/MWh and a 29% increase for tidal projects to £261 (~$323)/MWh.
These price adjustments aim to ensure that renewable projects remain sustainably priced and economically viable, fostering healthy competition in the upcoming auction.
With a separate funding pot allocated to offshore wind projects in recognition of their readiness, the UK aims to achieve its target of up to 50 GW of offshore wind, including 5 GW of floating offshore wind, by 2030.
The decision follows a comprehensive review, considering the latest evidence and the impact of global events on supply chains. The UK is already home to the world’s fifth-largest operational offshore wind farm projects. UK’s renewable energy generation has increased from 6% in the first quarter (Q1) 2010 to 48% in Q1 of this year.
The CfD program, initiated in 2014, assures energy projects guaranteed prices for the electricity they generate. Contract awards are determined through competitive auctions, favoring the lowest price bids to ensure consumer cost-effectiveness.
In September, the UK allocated CfDs to 95 new renewable energy projects, securing 3.7 GW of clean energy capacity in its fifth allocation round.
Early last year, the country outlined an Energy Security Strategy to accelerate the deployment of new renewable projects, including wind, nuclear, and solar, to contribute to 95% of the electricity generated.
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