UK CfD strike prices increase

Following the recent absence of any new offshore wind in the AR5 Contracts for Difference (CfD) auction, the UK government has increased the maximum strike price of offshore wind for AR6 by 66% in an effort to ensure a more competitive auction for developers. Despite having the largest offshore wind fleet outside of China, the UK’s leadership position as the biggest market for offshore wind has recently been at risk due to slowdown in construction projects and increased competition across supply chains from other markets.

In AR6, offshore wind will also be given a separate funding pot in recognition of the large pipeline of offshore wind expected this round and the strength of competition amongst other technologies in its original pot (hydro, onshore wind, PV). AR7, currently in open consultation stages, is looking into enabling repowering projects for onshore wind projects (vs accepting new projects only), which should incentivise the use of more efficient technology and reduce decommissioning of wind farms.