The UK government has increased the maximum price for offshore wind projects in its upcoming Contracts for Difference (CfD) auction following the failure to contract any offshore wind project in its latest round.
For the sixth CfD allocation round, which will open in March next year, the maximum strike price for offshore wind will be GBP 73 (USD 91/EUR 84) per MWh, the government said today. The new price represents a 66% increase from GBP 44 per MWh in the fifth round, which proved unviable for projects amid rising costs in the industry.
For floating offshore wind projects the prices will be increased to GBP 176 per MWh from GBP 116 per MWh. The maximum support for other technologies will be raised as well – for geothermal by 32% to GBP 157, for solar by 30% to GBP 61 and for tidal by 29% to GBP 261 per MWh.
The government also said that there will be a separate funding pot for offshore wind in the sixth tender round in recognition of the high number of projects ready to participate, helping the UK to progress towards its 50 GW by 2030 target.
“We recognise that there have been global challenges in this sector and our new annual auction allows us to reflect this,” said Energy Security Secretary Claire Coutinho.
According to RenewableUK’s chief executive Dan McGrail, the government could “attract a record level of private investment in offshore wind projects next year, with at least 10 projects likely to be eligible, able to power 8.5 million homes each year and reduce the UK’s need for gas by 39%.”
The UK has now moved to annual CfD auctions. The government also unveiled proposals today for the 2025 auction process, which would see offshore wind and floating offshore wind companies receive additional payments if they reduce their supply chain emissions or improve their social benefits.
(GBP 1 = USD 1.247/EUR 1.147)