UK’s CfD AR6 budget is the largest ever – but is it enough?

March 8, 2024
 | 
2 min read
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This year’s most awaited auction – UK’s CfD AR6 – is just around the corner. The announced offshore wind budget of 800 mGBP got a lukewarm reception by the industry, which is eager to get more turbines in British waters, due to several limiting factors in the framework.

An estimated 10 GW of offshore wind are eligible to participate in AR6, after the unsuccessful AR5 last year. This includes projects that were ready for AR5 as well as re-bidding of capacity from AR4 in 2022. Additional projects are waiting for a consent confirmation and if they receive it before the prequalification closes, they would also be eligible to participate.

However, with an assumed strike price of 55 GBP/MWh (real 2012) the 800 mGBP budget will add just under 5 GW to UK’s pipeline of projects with secured routes to market. This is partly due to the reference price for final delivery year set at 24.13 GBP/MWh (real 2012), which has been widely criticized by the sector as unrealistically low.

Another criticized element is the load factor set at 61%. A factor of 50% - which is closer to what we’re seeing for operating wind farms – would add 1 GW extra.

A result around 5 GW will leave a lot of ready-to-go projects waiting for the AR7 auction next year where they will be joined by even more competitors, and it will leave a significant gap to reaching UK’s target of 50 GW by 2030.

While fixed-bottom wind has its own pot of money, floating wind will again be competing with other emerging technologies. It’s already clear that AR6 will not be the auction where UK floating wind reaches commercial scale, as the eligible pipeline consists of stepstone projects between 58-100 MW.

At Aegir Insights we analyze offshore wind auctions worldwide, giving our clients key insights on current developments and upcoming auctions.

Aegir’s clients have access to our new Market Insights report next week, providing context on the coming AR6 auction as well as an exclusive analysis of LCoE levels for eligible projects.

Make smarter decisions faster in offshore wind

Aegir Insights' offshore wind decision solutions, consisting of software, data and market intelligence, support developers in all steps of their decision-making in competitive auctions.

Reach out to us to get more information on our new UK AR6 Market Insights report and understand how a subscription at Aegir Insights can keep you in the front of the pack and enhance your bid competitiveness.

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