Offshore Wind Worldwide Regulatory Framework in Selected Countries 5th Edition 2024 - Flipbook - Page 332
United Kingdom
332
In November 2020, the UK Government
confirmed the creation of a new dedicated
pot for bids specifically for fixed-foundation offshore wind projects. The aim is that
fixed-foundation offshore wind projects will
no longer compete with other technologies
for a share of investment, and floating wind
projects will compete only with other “less
established technologies” and not fixedfoundation wind projects.
(ii) Auction Round 4
In December 2021, the UK Government
opened the fourth CfD auction round (AR4)
aiming to back up to 12GW of renewable
capacity, providing £285 million to projects
through 15-year CfDs. The results are now
published9 and the budget for offshore wind
projects is £200 million.
(iii) Auction Round 5
In February 2023, the UK Government
confirmed its plans for the fifth CfD auction
round (AR5) and announced that the round
would have a budget of £205 million. It was
the first CfD auction to be run on the new
accelerated basis, with bidding opening in
March 2023 and closing in April of the same
year.
It was based on two separate technology
groups (‘pots’):
•
Pot 1: Energy from Waste with CHP,
Hydro (>5MW and 5MW), Remote Island
Wind (>5MW), Sewage Gas, and Solar
Photovoltaic (PV) (>5MW); and
•
Pot 2: ACT, AD (>5MW), Dedicated Biomass with CHP, Floating Offshore Wind,
Geothermal, Tidal Stream, and Wave
As such, it saw offshore wind competing
directly against other more established
technologies, while floating offshore wind
was grouped with and competed alongside
other less established technologies.
Results were published in September
2023, and a record total of 95 clean energy
projects were successful with their bids in
AR5, up from 93 in the previous round. Half
of the year’s total capacity was secured by
new solar projects, while onshore projects
delivered almost 1.5GW of capacity and
secured more than double the projects (24)
than AR4 (10).10
However, the auction budget, administrative
strike price, and reference prices used in
AR5, all contributed to a lack of uptake and
resulted in no bids for offshore wind. The
offshore wind industry also suffered from
higher inflation than the rest of the economy, with the cost of components increasing
by 40%.11 According to the government,
the global rise in inflation and the impact
on supply chains presented challenges for
projects participating in this round. The
government also noted that similar results
9 Contracts for Difference (CfD) Allocation Round 4: results - GOV.UK (www.gov.uk).
10 https://www.cfdallocationround.uk/news/government-publishes-allocation-round-5-results.
11 https://ore.catapult.org.uk/resource-hub/blog/renewable-energy-auction-results-in-no-bids-for-offshore-wind.
