UK Announces Largest Budget For Allocation Round 6

• The United Kingdom has unveiled its plans for AR6 auction under the CfD, reserving a total budget of £1.025 billion 
• Solar PV will get a maximum of £120 million with the lowest administrative strike price of £61/MWh compared to other competing technologies 
• Offshore wind gets the largest chunk of £800 million in this round after no bids were received in the previous round 
• Auction round is planned to be opened on March 27, 2024, and close on April 19, 2024 

The Department for Energy Security & Net Zero in the United Kingdom (UK) has announced a budget of over £1 billion for Allocation Round 6 (AR6) under the Contracts for Difference (CfD), its largest so far for any of the CfD allocation rounds. 

Solar PV projects with up to 5 MW capacity will compete for £120 million under pot 1, while offshore wind gets the lion's share of £800 million under pot 3. 

Other admissible and established technologies under pot 1 along with solar PV are waste with CHP, hydro power plants, landfill gas, onshore wind, remote island wind and sewage gas. The administration says the pot 1 budget of £120 million includes monetary maxima for onshore wind, solar and remote island wind of £120 million each. 

"The pot minima and maxima have been implemented to protect competition and value for money, considering the high degree of variation between renewable technologies in terms of cost, scale and size of project pipeline," according to the government. 

Floating offshore wind, advanced conversion technologies (ACT), anaerobic digestion (AD), dedicated biomass with CHP, geothermal, tidal stream and wave energy are part of emerging technologies under pot 2. The budget for this category is £105 million.  

There were no takers for offshore wind in the previous round when solar PV hogged the largest share of the awarded capacity. Back then, the government blamed global rise in inflation and the impact on supply chains for the lack of bids for this technology (see Solar Wins Big In UK's Allocation Round 5). 

In line with the national target to deploy 50 GW of offshore wind by 2030, the government has reserved the largest chunk of the £1.025 billion budget for the round for offshore wind in pot 3. It has also raised the administrative strike price for offshore wind to £73/MWh, up from £44/MWh in the previous round.  

However, the industry does not seem happy with the budget allocated for offshore wind. The Chief Executive of Scottish Renewables, Claire Mack said, "Industry was seeking a budget and framework that would repair the damage to the UK pipeline from last year's empty offshore auction. We continue to urge ministers to work with industry in the months ahead to ensure this is delivered so that the AR6 budget matches the enormous economic potential of all renewable energy technologies." 

Nonetheless, the administrative strike price is the lowest for solar PV projects at £61/MWh, even though it is a 30% increase over the £47/MWh lowest winning bid in AR5, as declared by the government earlier (see UK Increasing Strike Prices For 2024 RE Auction). 

The UK will launch the AR6 auction on March 27, 2024 and close it on April 19, 2024.