United Kingdom

United Kingdom

UK formally launches second CfD auction

UK: The auction to allocate contract for difference (CfD) support for renewable energy project delivery in 2021/22 and 2022/23, will run from 3 to 21 April.

BEIS minister Greg Clark (right) on a tour of Siemens' factory in Hull
BEIS minister Greg Clark (right) on a tour of Siemens' factory in Hull

The publication of a wide suite of documents by the Department for Business, Energy and Industrial Strategy (BEIS) on 13 March fired the starting gun for the next CfD auction, draft details of which were released in February.

The £290 million (€332 million) available for less-established "pot 2" technologies, first announced in November 2016, will be spread evenly across the two delivery years.

The strike price for offshore wind has been confirmed as based on 2012 prices of £105/MWh (€120/MWh) in 2021/22, falling to £100/MWh (€114/MWh) for 2022/23.

Offshore wind projects up to 1.5GW can be delivered in multiple phases. The first phase of any multi-development projects should be at least 25% of the total capacity and must be completed by 31 March 2023. The full project must be completed within two years after the deadline of the first phase.

Unlike the first CfD round in 2014, rules now allow for greater use of flexible bids with varying capacities and/or target commissioning dates.

BEIS has already committed to allocating a total of £730 million of annual support for three CfD auctions in the life of the current parliament.

But it remains unclear whether this figure will be reduced under an agreement between the Treasury and BEIS to compensate for an earlier projected controversial 18% overspend beyond the £7.6 billion cap for 2020 under the levy control framework (LCF).

The LCF itself is to be abolished, with new controls to be announced by the Treasury later ithis year.

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