Second CfD auction opens to bids

Auction will allocate up to £290 million in annual support to new renewable projects

Bidding has begun in the second contracts for difference auction which will allocate up to £290 million of annual support to new renewable power projects.  

The sealed bid window opened at 9am this morning (14 August) and will close at 5pm on Friday (18 August).

National Grid, the delivery body for the subsidy scheme, will run an independently audited auction once the bidding window has closed.

Applicants are expected to be informed of the results on 11 September. The auction has been held up by a qualification appeals process which Ofgem concluded on 2 August, and is following the slowest of five possible timetables.

The auction is only accessible to immature ‘Pot 2’ technologies such as offshore wind, tidal and anaerobic digestion.

It is widely expected to be dominated by offshore wind and industry figures have predicted a “very competitive” auction, with the clearing price falling well below the £92.50 per megawatt hour strike price offered to Hinkley Point C (2012 prices). Ofgem chief executive Dermot Nolan said he hopes the auction will clear at a price of “£70 or less”.

The previous Conservative government committed to allocating to up to £730 million of annual support to low-carbon generators over three contracts for difference auctions between 2015 and 2020.

Energy and Climate Intelligence Unit energy analyst Jonathan Marshall told Utility Week recently that the lack of certainty over the timetable for the remaining two auctions is likely to lead to lower prices in this round.