The UK government has announced a groundbreaking budget of over £1.5 billion for the next renewable energy auction, marking a significant increase of over 50%
compared to the previous budget. This funding boost is primarily aimed at enhancing the country's energy security through substantial investments in homegrown clean energy projects.
Historic Milestone for Renewable Energy
In a major step towards achieving clean and affordable energy for families and businesses, the government has set the largest-ever budget for renewable energy projects. This initiative is designed to bolster energy security, reduce reliance on fossil fuels, and promote economic growth and job creation across the UK.
Energy Secretary Ed Miliband revealed that this year's renewable energy auction budget has been increased by £500 million, bringing the total to over £1.5 billion. This record budget aims to accelerate the development of green infrastructure, ensuring the delivery of clean, low-cost, low-carbon electricity to households and businesses through technologies like wind turbines and solar panels.
Boosting Energy Independence and Security
The UK's over-reliance on fossil fuels has exposed families to fluctuating energy prices, exacerbated by geopolitical tensions such as the conflict in Ukraine. The government's investment in clean energy is part of a broader strategy to make Britain a clean energy superpower, enhancing energy independence and protecting consumers from future energy crises.
A significant portion of the budget, £1.1 billion, is allocated to offshore wind projects, highlighting the importance of this sector in the UK's clean energy strategy. This allocation exceeds the total budget of all previous auctions combined, signaling a strong commitment to attracting investment in UK waters.
Clean Energy Mission Board
The funding announcement coincides with the first meeting of the Clean Energy Mission Board, chaired by the Energy Secretary and attended by Ministers from various government departments. The board is focused on driving the mission to achieve clean power by 2030 and advancing towards net zero emissions.
Restoring the UK's Leadership in Green Technologies
Reflecting on the challenges faced in the previous auction round, where no offshore wind projects were secured, Energy Secretary Ed Miliband emphasized the government's renewed commitment to supporting the renewable energy industry. This year's record budget aims to re-establish the UK as a global leader in green technologies, ensuring the development of vital infrastructure to enhance energy independence and protect consumers from volatile fossil fuel prices.
Contracts for Difference Scheme
The renewable energy projects will be funded through the government's sixth renewable auction, known as the Contracts for Difference (CfD) scheme. This scheme provides developers with initial subsidies for clean electricity projects while ensuring cost efficiency for consumers. When wholesale electricity prices exceed the agreed CfD price, the subsidies are repaid, as seen during Winter 2022/2023 when CfD payments significantly reduced the funding needed for government energy support schemes.
Economic and Environmental Benefits
The increased budget not only promotes clean energy investment but also supports high-quality jobs in industrial regions and coastal communities. By reducing dependence on volatile global gas prices, the initiative aims to protect household bills and strengthen the UK's energy security.
Allocation Round 6 Budget Breakdown
- £1.1 billion for offshore wind: An increase of £300 million.
- £185 million for established technologies: Such as onshore wind and solar, an increase of £65 million.
- £270 million for emerging technologies: Including floating offshore wind and tidal energy, an increase of £165 million.
This substantial budget increase makes the Allocation Round 6 (AR6) seven times larger than Allocation Round 5 (AR5), demonstrating the UK's commitment to achieving its 2030 clean power target and supporting local economic growth.
Energy Minister Michael Shanks reiterated the government's mission to enhance energy security by connecting more renewable energy projects to the grid. The increased budget is expected to boost industry confidence, attract advanced clean technologies to Britain, and accelerate the transition to a decarbonized power sector by 2030.
Last week the government launched Great British Energy in partnership with the Crown Estate, backed by £8.3 billion of new money, which is estimated to create up to 20-30GW of new offshore wind developments reaching seabed lease stage by 2030.
The budget increase for Contracts for Difference marks the latest milestone in the government’s clean energy superpower mission, building on the lifting of the onshore wind ban and the approval of major solar farms powering the equivalent of almost 400,000 homes.
Now the budget has been set, the auction will take place in August with successful projects to be announced in September 2024. Photo by Dara Jasumani, Wikimedia commons.