Record contracts for difference (CfDs) auction for UK solar results in more than 90 projects securing fixed-price contracts. It follows intervention from the new UK government in summer 2024 to increase the auction budget. Strike prices achieved for all renewables technologies were well below the auction’s ceiling price.
September 3, 2024 Matthew Lynas
CfDs have been awarded to 93 solar projects totaling 3.288 GW of capacity, a new record for UK renewables auctions. Solar projects secured a strike price of GBP 50.07 ($64.25)/MWh, almost 18% below the auction’s ceiling price. Strike prices in UK CfD auctions are expressed in 2012 prices, with the generator receiving the equivalent adjusted for inflation. In total, 131 bids were successful at the CfD auction.
The result follows intervention from the new UK government in summer 2024 to increase the CfD auction budget to just over GBP 1.5 billion. This included an extra GBP 65 million for the auction’s Pot 1, which is open to solar projects exceeding 5 MW. In total, 9.65 GW of capacity was allocated meaning solar accounted for 34% of the sixth-round auction.
Successful developers will now be awarded a contract with the state-owned Low Carbon Contracts Company (LCCC). They will then be paid a flat rate for electricity over a 15-year period, commencing from a set delivery year. Around 1.1 GW of solar secured a CfD for delivery year 2026/2027 at auction, with the remaining 2.2 GW of contracted capacity awarded for the 2027/2028 delivery year.
The sixth round CfD auction is a step change in capacity allocation for solar when compared to round five. Just under 2 GW of capacity across 56 projects was tendered in the fifth UK CfD auction, held in September 2023.
By region, England accounted for the lion’s share of solar allocation with almost 2.9 GW of capacity securing a CfD contract. The remaining capacity was split between 316 MW of solar projects in Scotland and 74.88 MW of projects in Wales.
In a statement, Ed Miliband, secretary of state for the Department of Energy Security and Net Zero, described the fifth auction round as “disastrous” and claimed the sixth round was a “significant step” toward the government’s target of decarbonizing the electricity sector by 2030.
“These results show that together, this government and the energy industry are securing investment into our country. This auction has produced a record number of solar projects bolstering our mission for a solar revolution, we have powered forward with onshore wind, secured the largest commercial floating offshore wind project in the world and got the offshore industry back on its feet,” he said.
Mark Sommerfeld, deputy director of policy at REA (the Association for Renewable Energy and Clean Technology), said the record levels of solar and offshore wind secured at “competitive strike prices” represent real progress toward a decarbonized energy system.
“This progress will deliver real returns, creating jobs and shielding consumers from the volatility of international fossil fuel markets that have been the root of the energy crisis,” said Sommerfeld.
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