Climate Action

UK Government announce £1bn budget for renewable energy auction

Britain’s flagship renewables scheme has received its biggest ever funding boost from government, with more than £1 billion for its upcoming auction.

  • 07 March 2024
  • Press Release

Britain’s flagship renewables scheme has received its biggest ever funding boost from government, with more than £1 billion for its upcoming auction. 

The budget for the sixth Contracts for Difference (CfD) allocation round – confirmed by the Chancellor at Spring Budget – signals large-scale government backing to drive further investment into the UK’s thriving renewables sector and roll out more clean, secure, and affordable energy – while helping grow the economy.

This announcement comes as part of the government’s plan to strengthen energy security and bring down energy bills in the long-term. 

Following an extensive review of the latest evidence, including the impact of global events on supply chains, the government has allocated a record £800 million for offshore wind, which has been given a separate funding pot. This makes this the largest round yet, with 4 times more budget available to offshore wind than in the previous round.  

This follows the increase in the maximum price for offshore wind and floating offshore wind in November and will ensure Britain remains a global pioneer in wind power – as home to 5 of the world’s largest offshore windfarm projects. It will also help to deliver the UK’s ambition of up to 50GW of offshore wind by 2030, including up to 5GW of floating offshore wind. 

The CfD scheme gives renewable energy projects a guaranteed price for the electricity they generate, boosting investment in the UK – which has increased renewable electricity generation from 7% in 2010 to over 40% now.   .

Energy Security Secretary Claire Coutinho said: "When it comes to renewables, we have a record to be proud of. In 2010, just 7% of our electricity came from renewables, this is now up to over 40% today."

"We have the second largest renewables capacity in Europe, which is backed by £300 billion of investment since 2010, with £24 billion since September alone. We are sticking to the plan to deliver the long-term change our country needs to deliver a brighter future for Britain - securing more homegrown, green energy we can protect billpayers from volatile gas prices."

The Allocation Round 6 budget includes: 

  • £120 million for established technologies such as onshore wind and solar
  • £105 million for emerging technologies such as floating offshore wind and geothermal, including a ringfenced £10 million budget for tidal for a second consecutive year
  • £800 million for offshore wind

CfD contracts are awarded through a series of competitive auctions, which ensure value for money for consumers. This has reduced prices since the first auction and contributed to solar and wind being amongst the cheapest form of electricity generation in the UK. 

The government is making progress on the network reforms announced at last year’s Autumn Statement. This includes offering earlier grid connection dates to projects worth £40 billion, alongside transmission network companies announcing investment plans worth up to £85 billion. From next January, a new process will ensure that only projects which can show progress will be offered a connection date to join the grid. 

Neil McDermot, CEO, Low Carbon Contracts Company said: "We welcome the news from DESNZ on the budget for Allocation Round 6 which has a combined total of £1,025 billion across 3 pots. As the private law counterparty for the Contract for Difference scheme, LCCC looks forward to welcoming future projects into its portfolio which currently consists of over 31GW of renewable electricity generation and 240 contracts across 12 technology types."

Find out more here.