4C Offshore Empowering Intelligence

UK's CfD: From hero to zero

4C Offshore | Mark Casey
By: Mark Casey 08/09/2023 GOV.UK
Graham Stuart MP

he UK's CfD is widely considered to be the world's most successful auction, a policy success story that is mimicked globally. A year of turmoil for offshore wind continues with the UK's latest CfD auction AR5 resulting in zero offshore wind awards.

This leaves a crucial delay in installations for mid-end decade, adding pressure on DESNZ to escalate prices and budgets for next years auction (AR6) and brings into question the credibility of the UK's offshore ambitions. (50 GW by 2030 including 5 GW of floating.)

Here's what happened:

Fixed-bottom wind was included in auction pot 1, and was competing alongside other tech including solar, onshore wind remote island wind. The latter three took all the awarded budget, securing a total of 3.6 GW.

Qualifying candidates for fixed-bottom would have included a combined 4840 MW across EA1N. EA2, Norfolk Vanguard and Seagreen 1A.

However, SSE and Vattenfall had reported they were unwilling to bid, giving the administrative strike price ceiling of only £44/MWh (in 2012 money, around £59/MWh or €68/MWh in today's money).

The winning strike prices were higher than £44/MWh, implying there was zero interest from qualifying offshore wind projects.

The budget could have bought around 2 GW at the strike price, had projects bid...

It was a similar story for floating wind in Pot 2 with the budget consumed by tidal stream and geothermal with prices of £198/MWh and £119/MWh accordingly. The floating wind strike price, at £116 (€178/MWh in 2023 money) did not attract any successful bids.

The budget would have allowed one of the candidates to proceed through to construction.

Qualifying candidates were thought to include 260MW across Blyth Demo, Erebus and Pentland (via a revised Dounreay consent).

A full roundup of the impact of the current price context will be covered in the forthcoming MOR.

Energy and Climate Change Minister Graham Stuart commented: “We are delighted that our first annual Contracts for Difference auction has seen a record number of successful projects.“

“Offshore wind is central to our ambitions to decarbonise our electricity supply and our ambition to build 50GW of offshore wind capacity by 2030, including up to 5GW of floating wind, remains firm.”

For more information about offshore wind farm projects across the globe, click here.


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