£265 million up for grabs in Round 4 CfD auction

4C Offshore

The UK government published its Draft Budget Notice for Round 4 of its Contracts for Difference (CfD) auction. According to the Department for Business, Energy & Industrial Strategy (BEIS), an overall budget of £265 million has been made available for bidding projects.

Slated to open in late 2021, the fourth round aims to secure up to 12 GW of renewable energy generation for delivery between 2023 and 2027. The CfD scheme is the government’s primary method of supporting low-carbon electricity. It is designed to encourage investment in renewable energy by providing projects with a stable income, while protecting consumers from paying increased costs when electricity prices are high. The scheme is open to fixed offshore, floating and onshore wind energy as well as other renewable energy technologies.

The overall budget of £265 million is the maximum total amount of support available to be allocated in the fourth Allocation Round. Projects that are in the round will receive support for 15 years, subject to contract terms.

The fourth round will see three ‘pots’ for renewable technologies. In the Draft Budget Notice, BEIS also confirmed how it intends to release the budget per pot based on 2011/12 prices.

Pot 1 includes established technologies – such as onshore wind and solar PV. For Pot 1, £10m is to made available for projects with Target Commissioning Dates in 2023/24 or 2024/25. A capacity cap of 5GW is planned for this pot.

Pot 2 includes less-established technologies – including floating offshore wind, Advanced Conversion Technologies and tidal stream. A total of £55 million is being made available Pot 2 projects with Target Commissioning Dates in 2025/26 or 2026/27.

The remaining £200 million will be available to Pot 3 -solely offshore wind projects- with commissioning expected in 2025/26 or 2026/27.

It is not currently planned that a capacity cap will apply to this either Pot 2 or Pot 3.  

BEIS outlined the content of the Draft Budget Notice is subject to amendment and a final Budget Notice will be issued 10 working days before the commencement date of the Allocation Round.

For more information on offshore wind farms worldwide, click here.