Britain has raised the budget for its annual renewable power auction by 50% to £1.5 billion ($1.92 billion), the government announced on Wednesday. This increase, part of the new Labour government's strategy to decarbonise the electricity sector by 2030, is intended to accelerate the expansion of renewable energy sources such as wind and solar.
The additional £500 million, surpassing the £1 billion allocated by the previous Conservative administration, sets a record budget for this year's sixth auction round. The increased budget will allow more projects to be selected for government-backed price guarantees, known as Contracts for Difference (CfDs). Under this scheme, the government covers the difference between the market price of electricity and a guaranteed minimum price. If the market price exceeds the minimum, producers repay the difference to the government.
“This will restore the UK as a global leader for green technologies and deliver the infrastructure we need to boost our energy independence, protect billpayers, and become a clean energy superpower,” said Energy Secretary Ed Miliband.
The new budget allocates £1.1 billion to offshore wind projects, £185 million to established technologies such as onshore wind and solar, and £270 million to emerging technologies like floating offshore wind and tidal power. The increased funding responds to calls from renewable power developers and industry groups who argue that a larger budget is necessary to meet the goal of expanding the UK's fixed offshore wind capacity to 55 gigawatts (GW) by 2030, up from around 15 GW currently.
Companies including Iberdrola, Orsted, Equinor, RWE, SSE, and TotalEnergies are among those eligible to bid in this auction round.
“This will unlock billions in private investment, support thousands of jobs, strengthen our energy security and produce the green and affordable power needed for decades to come,” said Keith Anderson, CEO of ScottishPower.
However, analysts at Bernstein cautioned that the increased budget might still fall short of the required level to achieve the UK government's targets. They noted that previous auctions, including the fifth auction held in 2023, failed to attract offshore wind projects due to perceived inadequacies in the incentives offered.
