The UK Government’s announcement of a record £1.5 billion budget for the upcoming Allocation Round 6 (AR6) auction has been met with a positive response from the energy industry.
Emma Pinchbeck, Chief Executive of Energy UK, commented that the increased funding will help accelerate the development of new wind and solar projects.
She noted that expanding renewable energy capacity is crucial for reducing reliance on foreign gas and mitigating future energy price shocks:
Ms Pinchbeck said: “Offshore wind is critical to hitting the government’s 2030 target and we know that the vast majority of this capacity must be delivered through this auction round and next year’s.
“That remains a huge challenge but this is certainly a big step in the right direction and another welcome demonstration of the government’s ambitions.”
Jess Ralston, Head of Energy at the Energy and Climate Intelligence Unit, pointed out that while the budget increase to £1.5 billion is notable, it is based on electricity price projections that may be lower than current expert estimates.
Jess Ralston said: “There’s misunderstanding over what the so-called ‘budget’ for Contracts for Difference actually is. It’s based on unrealistic Treasury electricity price projections that are lower than experts suggest.
“The next auction is likely to secure enough offshore wind to save £30-40 per year on every household’s energy bill in the event of a future gas crisis.
“During the energy crisis, households saved around £20 from CfDs already in place. CfDs act more as a price stabiliser, ensuring prices can’t shoot up to super high levels.
“And with North Sea output in decline, irrespective of new drilling licences, every new wind farm means the UK is much less dependent on foreign energy imports.”
Keith Anderson, Chief Executive Officer of ScottishPower, welcomed the budget increase as a necessary reset following last year’s auction.
Mr Anderson said: “This will unlock billions in private investment, support thousands of jobs, strengthen our energy security and produce the green and affordable power needed for decades to come.”
Paul Cooley, Director of Offshore Wind at SSE Renewables, commented: “Today’s news is a very welcome signal; looking ahead it will also be vital that the parameters set in the next two auction rounds – AR7 and AR8 – encourage unprecedented investment and additional capacity across a range of renewable technologies.
“It is also important to ensure the end-to-end process of developing these mission-critical projects is accelerated. A good first step would be a quick decision to consent Berwick Bank, which at 4.1GW, is one of the most significant offshore wind developments in the world.”
