During the Spring Budget announcement on 6th March, Chancellor of the Exchequer Jeremy Hunt disclosed that the budget for the 2024 Contracts for Difference (CfD) auction would exceed £1 billion.
This was later verified by the Department for Energy Security and Net Zero (DESNZ), stating that the budget for Auction Round 6 (AR6) would be the largest ever at £1.025 billion.
Scheduled to commence on 27th March 2024, the funding for AR6 will be divided into technology groups known as 'pots'. These are outlined as follows:
The increase in the AR6 budget is substantial compared to the AR5 budget, which was initially set at £227 million and received a £22 million boost.
Despite its relatively modest budget, AR5 was a notable success for solar energy, with 56 solar projects collectively securing nearly 2GW (1,928MW) of the 3.7GW capacity awarded.
Overall, the low budget and strike prices of AR5 resulted in no offshore wind projects bidding in the auction, causing the UK to miss out on a significant opportunity to enhance its renewable energy capacity. The government is demonstrating efforts to address the shortcomings of AR5 by raising strike prices for all eligible technologies participating in the auction, leading to a 30% increase for solar from £47/MWh to £61/MWh.
Keith Anderson, CEO of ScottishPower, commented, "The government's decision to quadruple the available budget is a significant step in the right direction, showing a clear commitment to accelerating the adoption of affordable, greener energy sources. I anticipate a highly competitive auction. With the substantial pipeline available, there is room to further expand, prompting the government to reconsider the budget in light of developments."