The UK Government has outlined the budget for their next Contracts for Difference auction, confirming a £10 million ringfence for tidal stream projects, and an increased funding pot for wave, tidal and floating offshore wind developers to bid into.
The budget allocation is the largest ever announced for a single CFD auction round – totalling £1.025 billion for AR6.
This latest allocation round (AR6) of the UK Government’s renewable auction will open for bids from developers on 27th March, with funding split into ‘pots’ representing different energy types.
The previous round, AR5, saw no bids from floating offshore wind developers.
Tidal stream, wave energy and floating offshore wind (FLOW) will all compete in Pot 2 of the allocation, which has been significantly increased from £37 million in 2023 to £105 million in 2024.
The Department for Energy Security and Net Zero also announced that the £10 million ringfence for tidal stream technology will continue for a third year.
Last year 11 tidal stream projects, four of which were in Wales, were awarded contracts at £198/MWh, securing over 50MW of capacity, 22MW in Wales.
For floating offshore wind (FLOW), an increase in Pot 2 to a total of £105 million is a step in the right direction along with the increased Administrative Strike Price announced in November, however the technology will be competing with others for this funding, and Marine Energy Wales estimates there may only be potential to deliver 100 – 130 MW of FLOW in this round – the equivalent of one successful project in the whole of the UK.
It is encouraging to see the UK Government continuing to support tidal stream technology, with the announcement of the continued £10 million ringfence.
Wales is already leading the way when it comes to tidal stream energy. The Morlais Tidal Energy Demonstration Zone on Anglesey supported 28 MW of contracts in Allocation Rounds four and five, and has the potential to deliver 240 MW. Continued support is vital to bring the cost of delivery down and deliver high quality jobs for the people of Wales.
The Welsh opportunity for FLOW cannot be understated, but this funding pot covers the whole of the UK, including Scotland and the North East of England, both of which already have established supply chains. This increases competition and puts Welsh projects at risk of losing out.
Tom Hill, Programme Manager at Marine Energy Wales
Marine Energy Wales and the industry as a whole, has been calling for a ringfence of at least £20 million to accelerate deployment of tidal stream projects and support cost reduction for tidal stream technology.
On behalf of its members, Marine Energy Wales has also been calling for a dedicated route to market for wave energy developers – currently wave energy projects are able to bid, but the pot structure is such that so far they have been unable to compete on cost with other technologies.
The Celtic Sea Developer Alliance (CSDA), managed by Marine Energy Wales, is made up of developers and organisations with an interest in developing floating offshore wind projects in the Celtic Sea.
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