The UK Department for Business, Energy and Industrial Strategy (BEIS) has just announced the results of its latest renewable energy auction, originally scheduled for 2022. In the auction, some 56 solar projects totalling 1,927.68 MW of capacity were successful in securing 15-year Contracts for Difference (CfDs) with a final price of £47 (€58.64) per MWh. In addition to the solar projects, 1,480.74 MW of onshore wind capacity and 223.6 MW of remote island wind capacity were awarded at £52.29 per MWh, totalling 29 wind projects. A striking aspect of the auction was that for the first time, solar capacity exceeded wind capacity.

A number of companies, including Sonnedix, RWE, Opdenergy and Lightsource, have won contracts for solar projects, the largest of which has a capacity of 57 MW. The projects must be completed and interconnected between 2025 and 2028. Compared to the previous July 2022 auction, solar capacity is being allocated at $55 (€51) per MWh.

Under the CFD auction rules, clean energy producers participate in a bidding process to determine the strike price, which will determine the revenue they receive from the sale of electricity. When the market price is lower than the strike price, the government will subsidise the difference, while when the market price is higher than the strike price, the producers will be able to keep the surplus and return it to the government later. This mechanism is designed to encourage the development of and investment in renewable energy.