UK government allocates GBP60m for 3rd CfD auction

The UK government has allocated a draft budget of GBP 60 million (USD 76.9m/EUR 67.5m) for the third contract for difference (CfD) auction, planned to open by May 2019.

The draft budget was announced in a notice by the Department for Business, Energy and Industrial Strategy (BEIS) on Tuesday. The notice contains information on the draft budget, strike prices, delivery years, a capacity cap and details of any minima or maxima for the third CfD allocation round.

The government has put a total capacity cap in the tender round of 6 GW for projects to be delivered in 2023-2024 and 2024-2025. This cap, however, is pending state aid approval, which is expected to be received by the start of the allocation round. The auction is open to all so-called Pot 2 less established technologies such as advanced conversion technologies, anaerobic digestion (AD) of over 5 MW, biomass and combined heat and power (CHP), offshore wind, geothermal, remote island wind, tidal and wave power.

In terms of pricing, the administrative strike prices for offshore wind were set at GBP 56 per MWh for 2023-2024 and GBP 53 per MWh for 2024-2025. The one for remote island wind schemes exceeding 5 MW was set at GBP 82/MWh for both delivery years.

The following table contains detailed information about the administrative strike prices by technology.

A final budget for the third auction will be announced 10 working days before the start of the allocation round, BEIS said.

In the second CfD auction in 2017, the UK government awarded contracts to 3.3 GW of renewables. As previously announced, it intends to hold tenders every two years to deliver between 1 GW and 2 GW of offshore wind each year in the 2020s.

(GBP 1.0 = USD 1.282/EUR 1.124)

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