9.6 GW of renewables were awarded support in the latest Allocation Round 6 of the UK Contracts for Differences scheme, which represents a more than doubling of procured capacity from AR5. Reach out to Manon Derelle to find out more!
💡 AR6 results are out and here are our high-level takeaways💡 Pot 1 – Established technologies: 4.3GW of capacity secured a contract at £50.07 - 50.9/MWh (real 2012), with solar constituting 77% of cleared capacity. Key explanatory factors for the success of solar projects include (i) the supply chain costs for solar, which have seen a marked decrease this year relative to onshore wind, and (ii) the fact that solar projects are primarily located in England and embedded on the distribution network, resulting in lower network costs than onshore wind. Longfield solar is the largest awarded solar project to date, with 299MW of its 500 MW securing a CfD. Pot 2 – Less established technologies: The GreenVolt project – the first commercial-scale floating offshore wind farm – secured most of the volumes (400MW), for a price of 139.93/MWh (real 2012). This price represents a significant increase on the last cleared floating offshore wind farm in AR4 and will be widely seen as more representative of the cost of future floating offshore wind projects. GreenVolt managed to displace the other floating projects competing in the auction, which were smaller scale. It benefitted from a planning decision on the last day which made participation into the CfD auction possible, and from the significant increase in the Pot 2 budget announced in July. The remainder of the volumes (28MW) was made up by tidal projects, which benefitted from a ring-fenced budget of £15m. Pot 3 – Offshore wind: This allocation round provided contracts to 4.9GW of capacity, comprised of 3.4GW of new projects and 1.6GW of projects which were previously successful in AR4 and reduced their volumes to rebid in AR6 (‘Permitted reduction projects’). Results are aligned with permitted reductions seeking an uplift on their AR4 contract while still remaining competitive against new projects to ensure that their capacity would be fully contracted. The fact that several permitted reduction projects have split their capacity likely indicates strategic bidding to push the price closer to new projects. The new projects allocated are comprised of Orsted’s Hornsea 4 for its full volumes and Scottish Power’s East Anglia 2. Together they represent roughly 37% of the AR6 eligible pipeline of new OSW projects.