UK Grants CfDs for 3.7 GW of Clean Energy Projects in Fifth Round

Geothermal projects gain CfD support for the first time, offshore wind misses out

September 11, 2023


The United Kingdom has announced the allocation of Contracts for Difference (CfDs) to 95 new renewable energy projects, securing a substantial 3.7 GW of clean energy capacity in its fifth allocation round. In the previous round, 93 projects received CfDs.

These projects encompass renewable sources, including onshore wind, solar, and tidal energy developments. For the first time, geothermal projects harnessing natural underground heat sources have secured support through the CfD program.

However, offshore and floating offshore wind do not feature in this year’s allocation, aligning with trends seen in countries like Germany and Spain. This is attributed to the global rise in inflation and the impact on supply chains, which presented challenges for projects participating in this round.

With a budget allocation of £227 million (~$284 million), these projects are primed to contribute significantly to generating clean, domestically sourced energy, enough to power approximately 2 million homes.

Half of the total capacity will come from solar, while onshore wind projects have secured 1.5 GW of capacity—more than double the number of projects awarded in the previous round.

Furthermore, a dedicated £10 million (~$12.5 million) budget has been set aside for tidal stream projects, resulting in 11 projects with a cumulative capacity exceeding 50 MW. Three geothermal projects have received support, adding 12 MW of capacity, equivalent to powering 2 million homes.

The CfD program, initiated in 2014, assures energy projects guaranteed prices for the electricity they generate. Contract awards are determined through competitive auctions, favoring the lowest price bids to ensure cost-effectiveness for consumers.

According to Graham Stuart, the UK’s Energy and Climate Change Minister, the country’s clean energy sector has witnessed remarkable growth. “In 2010, renewables accounted for 7% of the country’s electricity generation. However, by the first quarter of this year, that figure had surged to 48%,” he said.

Stuart also emphasized that the UK aims to build 50 GW of offshore wind capacity by 2030, including up to 5 GW of floating wind technology. “Although offshore and floating offshore wind projects were not included in this year’s allocation due to global supply chain challenges and inflation, the government remains steadfast in its offshore wind expansion goals,” he said.

In May, the energy industry trade association Energy UK warned that the fifth CfD auction will not be sufficient to meet the UK Government’s 2030 target of 50 GW offshore wind capacity.

The UK’s transition to clean energy is set to attract approximately £100 billion (~$125 billion) in private investment, bolstering the nation’s journey towards sustainable energy and job creation. By 2030, this transition could generate 480,000 jobs, including 90,000 in the offshore wind sector.

In anticipation of continued progress, the government is already gearing up for the sixth round of auctions scheduled for 2024, marking the second annual auction. It anticipates the future participation of offshore and floating offshore wind projects.