Ed Miliband today (Wednesday 31 July) announced the budget for this year’s renewable energy auction is being increased by £500 million to over £1.5bn – a record budget – helping build new green infrastructure as part of the mission to deliver clean power by 2030.
Investing in clean energy is part of the Government’s plans following the cost of living crisis and Putin’s invasion of Ukraine, to make Britain a ‘clean energy superpower’ and boost the country’s energy independence.
This includes £1.1 billion for offshore wind – the backbone of the UK’s clean energy mission – which has more budget available than all of the previous auctions combined, sending a strong signal to industry to invest in UK waters.
The uplift comes on the day of the first meeting of the Clean Energy Mission Board – chaired by the Energy Secretary and attended by Ministers from across Whitehall – as part of plans for a mission-driven Government. The board will meet to ensure a relentless focus on delivering the mission of clean power by 2030 and accelerating towards net zero.
Energy Secretary Ed Miliband said, “Last year’s auction round was a catastrophe, with zero offshore wind secured, and delaying our move away from expensive fossil fuels to energy independence.
“Instead, we are backing industry to build in Britain, with this year’s auction getting its biggest budget yet. This will restore the UK as a global leader for green technologies and deliver the infrastructure we need to boost our energy independence, protect billpayers, and become a clean energy superpower.”
Industry will now bid for a share of the funding through the Government’s sixth renewable auction – known as the Contracts for Difference scheme – which provides developers with initial subsidies for clean electricity projects across Britain with a built-in design to keep costs low for billpayers.
These subsidies are paid back when wholesale electricity prices are higher than the agreed Contract for Difference price. This was seen over Winter 2022/2023, when Contracts for Difference payments reduced the amount needed to fund Government energy support schemes by around £18 per typical household.
Overall, the funding uplift represents more than a 50% increase on the budget previously set in March, driving clean energy investment in the UK, supporting high quality jobs in industrial heartlands and coastal communities, while protecting household bills from volatile fossil fuel prices.
Energy Minister Michael Shanks said, “Increasing the budget by more than 50% will boost industry confidence to back clean energy, attracting cutting edge clean technologies to Britain as we accelerate to a decarbonised power sector by 2030.”
Developers can bid for more funding and bring forward more renewable energy projects, which will deliver the government’s 2030 clean power target while supporting local economies grow across the country.
Following the increase, the Allocation Round 6 (AR6) budget includes:
- £1.1 billion for offshore wind, an uplift of £300 million.
- £185 million for established technologies such as onshore wind and solar, an uplift of £65 million.
- £270 million for emerging technologies such as floating offshore wind and tidal, an uplift of £165 million.
The increase means the AR6 budget is seven times higher than that of Allocation Round 5 (AR5).
Last week the Government launched Great British Energy in partnership with the Crown Estate, backed by £8.3 billion of new money, which is estimated to create up to 20-30GW of new offshore wind developments reaching seabed lease stage by 2030.
The auction will take place in August with successful projects to be announced in September 2024.
