Contracts for Difference scheme gets boost from new government

Following the election of a new Labour government in July 2024, there have been a number of announcements suggesting support for developing renewable technologies.

The latest of these came on the 31st July, when it was announced that the budget for the sixth allocation round (AR6) of the Contracts for Difference (CfD) scheme would be “significantly increased” to £1.555 billion. This represents an increase of over 50% to the budget set back in March.

The revised budget breaks down as follows:

• £1.1 billion is allocated to offshore wind, meaning that the AR6 budget for this renewable technology is greater than all of the previous rounds put together;
• £185 million is allocated to onshore wind and solar, both of which are more established; and
• £270 million is allocated to floating offshore wind and other emerging technologies. Excitingly, this includes £15 million which is ringfenced for tidal steam.

The announcement has been favourably received by the Offshore Renewable Energy Catapult, which described the increase as “both welcome and necessary to support the sector on the path to achieving 2030 targets of 60GW of offshore wind, and 5GW of floating wind specifically”. 

Marine Energy Wales also welcomed the announcement, saying that “Whilst not the £30m ringfence the tidal stream industry had been calling for, an uplift of £5 million is an extremely welcome and positive step forward for tidal stream technology, which will play a key role in achieving the UK and Wales’ Net Zero ambitions", and Scottish Renewables said that “the welcome increase to the Allocation Round 6 budget sends a positive signal to industry that the UK Government is serious about achieving its clean power mission”.

The results of AR6 are expected to be announced in early September 2024. Regardless of who is successful, the latest CfD round is expected to drive investment and create jobs in the UK's renewable energy sector.