Claire Perry, the UK Energy and Clean Growth Minister, announced yesterday that the next Contracts for Difference (CfD) auction round would take place in May 2019 and then there would be a further round every two years.
This is welcome clarity for the renewable energy industry, and offshore wind in particular, as these are the only Government subsidies available and a firm pipeline of bi-annual auctions is good news for potential investors.
The next auction will be open to all 'Pot 2' renewable technologies, which will bid against each other for subsidies. In practice, offshore wind is likely to dominate, as the costs of this technology have come down significantly in recent years, meaning it is able to offer lower bids. The Government estimate that each auction round would deliver up to 2GW of offshore wind capacity per annum in the 2020s, taking total offshore wind generation from 7GW currently (with another 7GW in progress), to 30GW by 2030, which would mean offshore wind generating over a third of the UK's power.
Remote island onshore wind projects will also be able to compete in this round, which is good news for the Scottish islands.
The total budget for the May auction and the future auctions is the £557 million that had been already announced as part of the Clean Growth Strategy. The auction parameters for the May 2019 auction will be set out later this year.