LCP Delta – AR6 leaves 28GW gap in offshore wind
Commenting on the results of this year’s Contracts for Difference, AR6 auction, Sam Hollister, Head of Economics, Policy and Investment, LCP Delta said:
“This year’s CfD auction might have helped to turn the ship around after last year’s disappointment, but this is by no means a renewable energy drive that is going full steam ahead.
“Offshore wind is set to be the heavy lifter for renewable generation, but this year’s auction only delivered 3.4GW of new offshore wind projects, with a further 1.5GW of existing projects already in the pipeline securing new contracts. This is well below the levels that were needed in this auction for the UK to reach its target of 55GW of offshore wind by 2030. Based on current timelines to bring projects on stream, next year’s AR7 and the following AR8 auction would each need to procure around 14GW of offshore wind (28GW in total). We are yet to see how impactful the recent partnership announcement with the Crown Estate will be on cutting the planning process for projects, which could give the Government an additional CfD auction to meet its target.
“The record total number of projects procured has been primarily driven by the number of solar projects. This is a significant step as we have seen the Government take early decisive action with solar projects in the last couple of months and this volume of support will be a strong boost to the industry. Meanwhile, the UK securing the largest floating offshore wind project in Europe is another strong signal to this growing industry which could play a significant role in the future of wind generation in the UK.
“Though this year’s auction came too early to take advantage of the recent removal of the onshore wind ban in England, we would expect to see onshore wind projects in England starting to come through in the next auction.
Looking ahead to AR7
“Based on this year’s allocation framework, the government would need to double the offshore wind budget for next year’s AR7 auction to over £2.5bn if we are to procure anywhere approaching the 14GW required to keep the government on track to meet its targets.
