- Government budget of £1.5bn announced to boost UK energy security
- The sixth allocation round (AR6) budget is 7 times higher than AR5
- £1.1bn has been allocated to the development of offshore wind power
For the sixth allocation round (AR6) of the CfD scheme, the final budget is £1.555bn
Ed Miliband MP, the Secretary of State for Energy Security and Net Zero, has committed £1.5bn to boost energy security in the UK and help deliver homegrown clean energy projects.
The budget is the largest ever for renewable energy and is 50% bigger than the most recent one of £500 million.
With the majority of the funds allocated to offshore wind generation, and the scheme aims to help build green infrastructure, as part of the UK’s 2030 clean power goals.
Describing the previous auction renewable energy round by the last government as a “catastrophe” that hampered the UK’s energy independence, Miliband said Labour was “backing industry to build in Britain”.
“This will restore the UK as a global leader for green technologies and deliver the infrastructure we need to boost our energy independence, protect bill payers, and become a clean energy superpower,” Miliband said.
Energy minister Michael Shanks MP said it was the government’s mission to make the UK more “energy secure” and that the country needs “more renewable energy projects connected to the grid and powering our homes”.
“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,” Shanks said.
The budget comes under the Contracts for Difference (CfD) scheme, a government incentive for investment in renewable energy to support low carbon electricity generation.
It provides project developers with a ‘strike price’ and protection from unstable wholesale prices and protects consumers from paying higher bills when electricity prices rise.
However, the scheme is not a subsidy, and when the wholesale cost of electricity is higher than the strike price, the Exchequer receives the difference, cutting the cost of the scheme.
For the sixth allocation round (AR6) of the CfD scheme, the final budget is £1.555bn, which is an overall increase of £530m.
The budget is split into Pots, with £185m for Pot 1, established technologies such as solar power, an uplift of £65m, £270m for Pot 2, emerging technologies, an uplift of £165m, and £1.1bn for Pot 3, offshore wind, an uplift of £300m.
The increase means the AR6 budget is seven times higher than AR5.
Chris Hewett, chief executive of Solar Energy UK, said: “This is further very welcome news for the solar sector, following yesterday’s consultation on planning rules and the approval of three large-scale solar farms only a week after the election.
“While all depends on the results of the coming auction, the increased allocation should allow many more projects to go ahead, driving down carbon emissions and energy bills alike.”
The cost-of-living crisis has revealed the UK’s over-reliance on fossil fuels, the markets of which have become extremely volatile since the war in Ukraine.
Investing in clean energy is hoped to grant Britain energy independence while simultaneously making it a clean energy superpower and global leader of net zero goals. This will also unburden those beholden to steep prices on the current grid.
