Hogan Lovell OffshoreBook 2023 230809 OnlinePDF - Flipbook - Page 278
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United Kingdom
impetus to the growth of offshore wind
and the publicity created by the conference increased public support for
further expansion of renewable energy
generation of all kinds, but especially
offshore wind, which is widely recognised as being crucial to the UK’s energy
transition plans.
(d) Contract for Difference
The Contracts for Difference (CfD)
scheme is the UK Government’s primary
mechanism for supporting low-carbon
electricity generation. The scheme
was introduced in order to drive down
the cost of projects (especially those
involving new technologies) and help leverage £90 billion of private investment
by 2030.
The scheme has already proved successful at bringing down the per unit price of
offshore wind by around 65% since the
first auctions were held – helping the
UK become one of the world’s largest
generators of wind power.
(i)
new dedicated pot for bids specifically for fixed-foundation offshore
wind projects. The aim is that fixedfoundation 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 will
not need to compete with 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 published15 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
latest CfD auction round (AR5) and
announced that the round would
have a budget of £205 million. It is
the first CfD auction to be run on
the new accelerated basis, with bidding opening in March and closing
in April 2023. The allocation outcomes are expected to be notified
before the middle of September
2023, which means that the process
is very streamlined in comparison to
previous auction rounds.
Auction Round 3
In September 2019, the UK Government announced the results of CfD
auction round 3 (AR3), in which UK
offshore wind projects secured
15 year CfD contract support at
auction clearing prices of between
£39.65 - £41.61 / MWh (2012 prices).
In November 2020, the UK Government confirmed the creation of a
15 Contracts for Difference (CfD) Allocation Round 4: results - GOV.UK (www.gov.uk)
