UK announces move to annual CfD auctions

By Erin Voegele | February 09, 2022

The U.K. government on Feb. 9 announced plans to increase the frequency in which it holds Contracts for Difference (CfD) auctions. Starting in 2023, the auctions will be held annually. Currently, the CfD auctions are held every two years.

The U.K.’s CfD scheme is the country’s primary method of supporting renewable energy growth. Landfill gas, sewage gas, energy-from-waste with combined-heat-and-power (CHP), large-scale anaerobic digestion, and dedicated biomass with CHP are among the technologies eligible to participate in the fourth round of the CfD scheme, announced in September 2021. Coal-to-biomass conversions were eligible for earlier rounds of the program.

A statement released by the U.K. Department for Business, Energy and Industrial Strategy explains that the increased frequency of CfD auctions will help accelerate the deployment of low-cost renewable electricity within the country.

The U.K. Association for Renewable Energy and Clean Technology has applauded the change to the CfD program.  “The REA welcomes the move to annual CfD auctions as confirmed by BEIS today,” said Frank Gordon, director of policy at the REA. “We and others have called for more frequent auctions for a number of years, most recently in response to the energy bills crisis. More power will be needed as sectors decarbonize, and moving to renewable, domestic energy supplies is ultimately the only way to prevent us being exposed to volatile international fossil fuel prices that drive bill increases, while enabling Net Zero.”

“The fact that CfD projects have paid back several million pounds to the Treasury illustrates the cost effectiveness of new renewable power,” he continued. “We look forward to seeing more detail on the proposed timetable and budget for the auctions, and would like to see a timetable of at least a rolling three year dates, ideally out to 2030, to allow industry time to plan.

“The success of offshore wind needs to be replicated for other essential technologies, such as wave and tidal, geothermal, ACT and bioenergy, to ensure a balanced generation mix with benefits felt across the country,” Gordon added. “We now urge the Government to move at pace to introduce effective flexibility markets, support for long term energy storage, decarbonize the heat sector and introduce new measures to allow householders to reduce their energy usage in the face of rising bills.”