Renewables investors have attacked as inadequate the government’s earmarking of £205 million for its latest Contracts for Difference bidding round.

The figure was revealed by energy minister Graham Stuart on the day of last week’s Budget.  But developers’ representative bodies fear it is too aggressively low to repeat the success of last year’s Allocation Round (AR) 4.

Cumulatively 27 GW of clean generating capacity have emerged under previous bidding rounds.  Last summer’s AR4 was backed by £285 million.  It was the first CfD round to include solar farms among a total 11 GW green capacity guaranteed.

This year’s AR5 is the first to be held annually.  It includes a £10 million reserve for wave and tidal technology, alongside  £170 million for established offshore wind.

CfDs’ justification, backed by seven years of experience, is to secure low prices for consumers, while protecting developers of emerging clean technologies from volatile wholesale markets.  To make their point, ministers cite offshore wind, where unit costs of generation dropped by 65% between 2015 and 2019.

Minister Stuart said: “The move to annual auctions and continued investment in renewable energy will limit the impact of events like Putin’s illegal war in Ukraine and drive our overriding priority for the UK to have amongst the cheapest wholesale electricity prices in Europe.

“I am excited to see the opportunities that will open for Britain’s world-class renewable industries as annual auctions kick off this year, enhancing the UK’s reputation as among the most attractive places to invest in for a secure, affordable and prosperous future.”

But for low carbon generators RenewablesUK, the body’s economics and markets manager Michael Chesser said the £205 pump-priming wouldn’t release AR5’s desired capacity.

“Concerns about energy bills and energy security are at a record high, so the UK should be trying to maximise investment in low-cost clean energy”, said Chesser.

“Unfortunately, in the light of global inflationary pressures, the budget and parameters set for this year’s CfD auction are currently too low and too tight to unlock all the potential investment in wind, solar and tidal stream projects which the industry could deliver.

The UK was sending the wrong investment signals, as the US and the EU were bending over backwards to offer incentives to developers, the lobbyist added.

“We risk losing vital opportunities to scale up our supply chains around the UK, denying communities the industrial-scale benefits which our sector offers. We’re also jeopardising our global lead in cutting-edge clean energy technologies like floating wind and tidal stream.

“We’re calling for the Government to revise the CfD budget so that we can stay on track to deliver on our renewable energy targets, as well as creating tens of thousands of high-quality green tech jobs and attracting billions in private investment in the years ahead”.


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