The UK’s Department for Energy Security and Net Zero (DESNZ) announced today the results of its 7th annual offshore wind “Contracts for Difference” (CfD) auction round, securing record 8.4 GW in contracts, making it the largest-ever single procurement of offshore wind energy in the UK and Europe.
According to the DESNZ, the renewable energy capacity generated by the auction’s projects will provide electricity equivalent to the energy needs of more than 12 million homes, with the auction results set to unlock approximately £22 billion (USD$29.6 billion) in private investment.
German power producer RWE emerged as the biggest auction winner by far, securing 6.9 GW in CfD awards, primarily for its Norfolk Vanguard and Dogger Bank projects in the British North Sea.
Under the UK’s CfD system, the government sets an agreed price per MWh of electricity with a renewable power company through a competitive auction, with the government paying the company if the market price is below the guaranteed price, and the company paying back the excess if the market price is higher. The average price in the new auction was £90.91 per MWh.
The results mark a sharp rebound from 2023’s auction round, in which no new contracts were awarded, with developers assessing the government’s price as too low. The government budget for the new round was increased to £1.8 billion, double the initial £900 million allocation, and substantially above 2023’s £227 million.
In a statement announcing the results, the DESNZ called the results a “monumental step towards ending the country’s reliance on volatile fossil fuels and lowering bills for good,” which puts the UK on track for its 2030 goals, which include having at least 95% of electricity generated by clean energy sources.
UK Energy Secretary, Ed Miliband said:
“With these results, Britain is taking back control of our energy sovereignty. This is a historic win for those who want Britain to stand on our own two feet, controlling our own energy rather than depending on markets controlled by petrostates and dictators.”
The contract awards include 3.1 GW for RWE’s Norfolk Vanguard East and Norfolk Vanguard West projects, located 50 to 80 km off the coast of Norfolk, 3GW for Dogger Bank South 100 km off the northeast coast of England, and 0.8 GW for RWE’s Awel y Môr project in the Irish Sea. SSE Renewables’ Berwick Bank project in the North Sea was also awarded contracts for 1.4 GW. The auction also awarded contracts for almost 200 MW of floating wind projects.
Alongside the contract awards, RWE also announced that KKR has acquired a 50% interest in the Norfolk Vanguard projects, with the companies agreeing to jointly develop, construct and operate the wind farms.
Markus Krebber, CEO of RWE AG, said:
“We are delighted to have been successful in securing long-term offtake contracts for five projects in AR7. In addition, we are excited to join forces with KKR as our strategic partner in the Norfolk Vanguard East and Norfolk Vanguard West offshore wind projects. By combining KKR’s investment know-how in large-scale, complex infrastructure projects with RWE’s extensive offshore wind expertise, we are well positioned to jointly realise these major projects.”
