These auctions are a cornerstone of the government’s strategy to encourage and support low carbon power generation projects, including solar and offshore wind farms.
For the past 15 years, CfD auctions have been instrumental in reducing costs and providing certainty to clean energy developers.
However, concerns are now mounting within the renewable energy sector – analysts and industry insiders have voiced their apprehensions, primarily due to rising cost pressures and perceived inflexibility in government policies.
The government has decided to reduce the offshore wind cap price from £46/MWh to £44/MWh (in 2012 prices), aiming to continue the trend of decreasing real prices in renewable energy.
However, due to rising construction costs, it’s unlikely that developers can bid below this cap price, potentially leading to no bids.
According to a leading trade association, it is becoming increasingly likely that there will be a scarcity of bids for offshore wind projects in this round of CfD auctions.
Reports from The Times, citing insider sources, suggest that there might not be any significant bids for new offshore wind farm projects in this auction.
POLITICO has also reported on industry figures expressing their concerns about the outcome.
In prior rounds, offshore wind has held a prominent position, with nearly 7GW out of the nearly 11GW of CfDs awarded last year being allocated to fixed-bottom projects.