UK opens biggest ever renewable tender, seeking 12 gigawatts of new capacity

The UK government has launched the latest and biggest renewable energy tender this week, seeking to attract 12GW of new renewable energy capacity.

The fourth round of the UK’s hugely successful Contracts for Difference (CfD) renewable energy tender is backed by £285 million ($A530 million) of funding per year.

It is the country’s main mechanism for supporting the deployment of low-carbon electricity generation, including nuclear, and has already allocated around 16GW of new renewable electricity capacity through the first three rounds – including 13GW of offshore wind.

First flagged in September, the fourth round is planned to be the “biggest ever” renewable support package and, for the first time since 2015, opens eligibility for all renewable technologies – including more mature technologies, such as onshore wind and solar PV, that have been excluded from previous rounds.

Winners of the competitive allocation round are those that have submitted the lowest price bids within each pot, with the subsequent contracts providing important certainty and long-term price stability for electricity generators by reducing their exposure to volatile wholesale prices.

Offshore wind will be backed by a total budget of £200 million with no capacity cap for new deployment. Established technologies including onshore wind, solar PV, and hydropower will be eligible for £10 million in Pot 1, with a 5GW capacity cap and individual limits of 3.5GW on both onshore wind and solar PV.

Meanwhile, less established technologies will compete in the second pot for £75 million, with £20 million ringfenced for funding for tidal stream projects and another £24 million for floating offshore wind projects. Other technologies able to compete in this second pot include geothermal, remote island wind, and wave.

All in all, more than 16GW worth of wind capacity could be ready to compete and over 23GW worth of renewables overall, according to Dan McGrail, CEO of UK renewable energy trade body RenewableUK.

“This is set to be a landmark auction securing the largest amount of new renewable energy capacity so far, as ministers have listened to our calls for the overall capacity cap to be lifted to reflect the enormous appetite among companies and investors in UK projects,” he said.

“We need a range of renewable technologies to get us to net zero as fast as possible, so it’s great to see the development of innovative floating wind and tidal stream projects supported by ring-fenced funding, as we’ve been advocating.

“This will enable us to ramp up the roll-out of these cutting-edge technologies, building up massive industrial opportunities for the future, including exports.”

In addition to the huge capacity potentially racing for a contract, the CfD’s fourth round also strengthens the supply chain plan process so as to support the effective development of open and competitive supply chains which, in turn, help to grow the job opportunities for the low-carbon electricity generation sector.

“Our biggest ever renewables auction opening today will solidify the UK’s role as a world-leader in renewable electricity, while backing new, future-proof industries across the country to create new jobs,” said Kwasi Kwarteng, the UK’s business and energy secretary.

“By generating more renewable energy in the UK, we can ensure greater energy independence by moving away from volatile global fossil fuel prices, all while driving down the cost of new energy.”

The UK government expects this fourth CfD round to go a long way to reaching the government’s ambition of delivering 40GW of offshore wind capacity by 2030 – which includes 1GW of floating offshore wind – as set out in the country’s Ten Point Plan for a Green Industrial Revolution.

This fourth allocation round will run through to 14 January 2022, with final results expected to be announced during the middle of 2022.