Up to 12.2GW of offshore wind eligible for next CfD round

By Rob Horgan

As much as 12.2GW worth of offshore wind projects could bid in the next contracts for difference (CfD) auction.

Project pipelines shared with Utility Week by industry analysts and trade bodies show that around 8GW of offshore wind projects already have secured planning consent, with the 4.1GW Berwick Bank project awaiting sign off on its planning application.

In size order, the projects which could feasibly bid for a CfD are:

Project name Developer Capacity  
Berwick Bank* SSE Renewables 4.1GW
Norfolk Vanguard Vattenfall 2.8GW
Hornsea 4 Orsted 2.6GW
East Anglia 2 ScottishPower Renewables 900MW
East Anglia 1 ScottishPower Renewables 800MW
Awel y Mor RWE 576MW
Seagreen 1A SSE Renewables 500MW

Source: Renewable UK and Aurora Energy Research
*Renewable UK does not include Berwick Bank in its pipeline as it has not yet received planning permission   

The government previously announced a 66% increase in the offshore wind administrative strike price cap for the next CfD auction.

The administrative strike price – the maximum amount generators will be paid per megawatt hour (MWh) – has increased for the next auction round from £44 to £73 (2012 prices). It follows a disappointing auction round last year, which attracted no bids from offshore wind developers.

While the increased strike price was widely welcomed, the budget – which is due to be announced next month – will ultimately determine how many projects bid.

Ashutosh Padelkar, senior associate for power and renewables at Aurora Energy Research, told Utility Week that the budget will be “crucial in determining how much of this capacity is contracted”.

He added: “Nearly 13GW of offshore wind capacity has secured planning permission and could be eligible to participate in AR6.

“The budget and reference prices announced by the government will be crucial in determining how much of this capacity is contracted – at the Administrative Strike Price of £73/MWh (real 2012), even a budget of £1 billion could only contract around 4GW of offshore wind capacity, whereas if competitive pressures drive the strike price down by 25% to £55/MWh (real 2012), we could see 7GW of capacity receive contracts.”

The budget will be set on 13 March 2024, according to the government’s indicative AR6 timeline. Funding for offshore wind has been separated into its own pot – something Padelkar told Utility Week “will make a big difference as it won’t have to compete for funding with other technologies”.

He added: “It is good that they have put offshore wind in its own funding pot. The question now is how much are they going to put in that pot.

“If it is still a low amount then some projects risk missing out on funding even though they are ready to go.”

A spokesperson for Renewable UK added that it is “impossible to say who will bid” in the upcoming auction as “eligibility does not mean they will bid – just that they could choose to do so”.

A briefing on offshore wind compiled by analysts at Morningstar DBRS estimates that as much as 10GW will be procured during AR6.

It adds: “In November 2023 the UK announced it would raise the maximum price offshore wind farm developers can secure in a contract auction by 66% to GBP 73/MWh (in 2012 prices), from GBP 44/MWh previously.

“This action is in response to the government’s failed auction in September 2023, which saw no bids from offshore wind developers; development costs had increased significantly, yet contracted power prices remained stagnant.

“The new terms are expected to result in more successful auctions going forward, with likely 10GW of projects to be awarded at the UK’s next auction.”

In addition to traditional offshore wind developments, Renewable UK also estimates that 270MW of floating offshore wind could bid in the upcoming auction.

Three projects which would be eligible to bid are: the 100MW Erebus Floating Wind Demonstrator; the 100MW Pentland Floating Wind Farm; and the 70MW Blyth Offshore Wind Demonstration Project (Phase 2).

The government is also increasing maximum bid prices for other technologies. These include: