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Renewable industry to bid for record breaking funding as the Energy Secretary unveils the largest-ever budget for delivering new homegrown clean energy projects in the UK – boosting energy security, securing cheap power for families, and unlocking economic growth and jobs for the country.
Ed Miliband announced the budget for this year’s renewable energy auction is being increased by £500 million to over £1.5 billion – a record budget – helping build new green infrastructure as part of the mission to deliver clean power by 2030.
Funding will accelerate the delivery of clean, cheap, low-carbon electricity to families and businesses, generated by renewable energy technologies such as wind turbines and solar panels.
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.
Ed Miliband, Energy Secretary 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.
The scheme’s design means the central government’s budget will not be impacted, following findings from a Treasury spending audit revealed £22 billion of unfunded pledges inherited from the previous government.
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.
Michael Shanks, Energy Minister said:
“It is our mission for the UK to be more energy secure and to do that we need 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.”
The Contracts for Difference scheme works by developers bidding for contracts to help deliver renewable energy projects, with the scheme providing a guaranteed price for the clean electricity they generate. This gives industry greater certainty to invest, knowing that when electricity prices fluctuate, they will always get a set price for their projects.
The scheme’s design awards contracts through a series of competitive auctions, where the lowest price bids are successful – providing value for money and cheap power for consumers.
Building new, clean renewables also reduces exposure to volatile global gas prices which drove peak average wholesale electricity prices to record highs in 2022. Investing in renewables will protect household bills in the long-term and put Britain in control of its energy security.
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:
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