The UK government has unveiled a £310 million budget for the Allocation Round 7a (AR7a) Contracts for Difference auction, a move that could significantly reshape the country’s renewable energy landscape. This funding will be open to all non-offshore wind technologies, with a clear division between established and emerging technologies.
Pot 1, which includes onshore wind, solar, and other mature technologies, has been allocated £295 million. Notably, the government has set a £160 million “hard constraint” for onshore wind and remote islands wind, effectively ringfencing this budget to ensure these technologies receive dedicated support. Solar projects, meanwhile, will have a £295 million maximum, described by the Department for Energy Security and Net Zero (DESNZ) as a “purely technical” measure to separate solar’s clearing price from other technologies in Pot 1.
Pot 2, reserved for less established technologies like wave and tidal stream, has been granted £15 million. The delivery years for Pot 1 have been set for 2027-28 and 2028-29, indicating a strategic timeline for integrating these technologies into the UK’s energy mix.
The administrative strike prices have been confirmed at £92/MWh for onshore wind and £75/MWh for solar, both based on 2024 prices. These caps, previously announced in July, provide a benchmark for developers to aim for in their bids.
AR7a is following its longest schedule, with a sealed bidding window set for 5-9 January and results expected to be published between 6-9 February. This extended timeline could allow for more thorough evaluations and potentially more competitive bids.
Fixed-bottom and floating offshore wind are being managed in a separate auction stream this year, with a £1 billion budget confirmed by the government in October. This separation underscores the UK’s commitment to advancing offshore wind technologies independently from other renewables.
The implications of this funding allocation are significant. The ringfencing of £160 million for onshore wind and remote islands wind could accelerate the deployment of these technologies, potentially boosting local energy production and reducing reliance on imports. The technical cap on solar, while described as purely technical, could influence the competitiveness and pricing strategies of solar developers.
Moreover, the dedicated budget for emerging technologies in Pot 2 signals a commitment to fostering innovation in the renewable energy sector. If successful, these technologies could play a crucial role in diversifying the UK’s energy mix and enhancing its energy security.
The extended timeline for AR7a suggests a more deliberate and possibly more rigorous evaluation process. This could lead to more stable and sustainable projects being selected, ultimately benefiting the UK’s renewable energy goals.
In summary, the UK’s £310 million allocation for AR7a represents a strategic investment in its renewable energy future. By ringfencing budgets, setting clear strike prices, and separating auction streams, the government is creating a structured environment for both established and emerging technologies to thrive. The outcomes of this auction could significantly influence the trajectory of the UK’s renewable energy sector, potentially setting new benchmarks for innovation, competitiveness, and sustainability.