UK raises maximum prices for offshore wind in renewable energy auction

The government has raised the maximum price offshore wind and other renewables projects can receive in its Contracts for Difference (CfD) auction scheme.

The decision, which follows an extensive review of the latest evidence, including the impact of global events on supply chains, aims to ensure the auction performs effectively.

The maximum strike price has been increased by 66% for offshore wind projects, from £44/MWh ($55/MWh) to £73/MWh ($91/MWh), and by 52% for floating offshore wind projects, from £116/MWh ($144/ MWh) to £176/MWh ($219/MWh) ahead of Allocation Round 6 (AR6) next year.

According to the Department of Energy Security and Net Zero, this will help ensure projects are sustainably priced and economically viable to compete in AR6.

In AR6, offshore wind will also be given a separate funding pot in recognition of the high number of projects ready to participate.

This will ensure competition among a strong pipeline of projects, helping the UK deliver on its ambition of up to 50GW of offshore wind by 2030, including up to 5GW of floating offshore wind.     

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Energy security secretary, Claire Coutinho, commented on the announcement:  "Today we have started the process of our latest Contracts for Difference auction for renewables, opening in March next year. We recognise that there have been global challenges in this sector and our new annual auction allows us to reflect this.

"This is a vital part of our plan to have enough homegrown clean energy, bringing bills down for families and strengthening our energy independence."

The government is also increasing maximum bid prices for other technologies, offering greater certainty for developers. These include:

• geothermal by 32% - from £119/MWh ($148) to £157/MWh ($195)
• solar by 30% - from £47/MWh ($58) to £61/MWh ($76)
• tidal by 29% - from £202/MWh ($251) to £261/MWh ($325)

The consultation published today invites views on how sustainable industry rewards, formerly non-price factors, could be incorporated into the 2025 auction process.

This would be for offshore wind and floating offshore wind companies and would mean additional payments if they reduce the carbon emissions in their supply chains, or if they improve their social benefits, ensuring AR7 is the cleanest and most impactful auction yet.

This could be done by investing in high-skilled jobs, using more environmentally-friendly factories to assemble components, such as wind turbines, investing in new manufacturing facilities or skills in deprived areas, or finding new, innovative ways to reduce their carbon emissions, for example.