UK cuts CfD budget by 80 percent

All winning projects from the most recent offshore wind auction would be too expensive to come under consideration in the UK's next Contract for Difference round in May. Approximately one-tenth of the promised amount will end up being allocated over the coming three rounds.

Photo: Ørsted

When it comes to offshore wind, there is seldom opportunity to rest on one's laurels. When the UK last September announced the three winning bids in the most recent Contract for Difference (CfD) auction, news that projects Hornsea 2 and Moray East would be able to be installed for only GBP 57.5 took all the headlines. However, in the coming auction, planned for May, these projects would end up being too costly, reports the British Ministry of Energy in its latest budget draft.

Here, a cap is placed on offshore wind projects at a mere  GBP 56 per MWh for projects in 2023/'24 and GBP 53 per MWh for installations to be commissioned the following year – a price cap that is markedly higher for the other types of energy sources that figure in the the so-called Pot 2 for less-developed technologies. For 2023/'24, these range from GBP 82 per MWh for onshore wind energy from remote islands in the North Atlantic to GBP 281 per MWh for wave energy.

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