The fifth Contracts for Difference allocation round, known as Allocation Round 5, secured no offshore wind capacity, according to Ember, the energy think tank, in a report published on 18 October 2023. Ember described the outcome as "the latest warning sign" for the UK's clean power ambition, and said the 2030 offshore wind target of 50 GW is now "highly at risk"1.
The government's stated plans include reaching 50 GW of offshore wind by 2030, 70 GW of solar by 2035, 10 GW of low carbon hydrogen production capacity by 2030 and more than 2 GW of carbon capture, usage and storage projects by 20301. The UK committed in 2021 to generating all electricity from clean sources by 2035, and the British energy security strategy targets 95% clean power in 20301. Ember's modelling found the UK could produce 98% of its electricity from clean sources by 2030 if existing commitments are delivered on time, against 89% in a lower ambition "Falling short" scenario1.
"The latest warning sign was a renewable auction round that failed to secure any offshore wind capacity, a critical technology for the UK's clean power ambition."
Ember said the three future renewable auction rounds must each secure 8 GW of offshore wind if the UK is to reach its 2030 target, against an average of 4 GW across the first four auctions1. It also cited permitting times of five to six years for a wind farm and two years for a solar farm, and said the Norway-UK interconnector is already delayed by three years1.
The report set out bill and trade effects under its two scenarios.
| Measure in 2030 | Delivering commitments | Falling short |
|---|---|---|
| Clean electricity share | 98% | 89% |
| Average household bill versus Q3 2023 price cap | £300 lower | £40 per year higher than the ambitious scenario |
| Electricity trade position | Export 49 TWh | Import around 4 TWh |
| Fossil gas imports | Half the current reliance, 4 bcm lower | 73 TWh, double the ambitious scenario |
| Wholesale component of household bills | £65 per MWh | £89 per MWh |
Source: Ember1
Ember put the total household saving under the ambitious pathway at £8.7 billion in 2030 compared with today, and said the low ambition pathway means consumers miss out on more than £1 billion in bill savings1. It said the wholesale component of household electricity bills drops to £65 per MWh, "a staggering two thirds lower than the £176 per MWh in OFGEM's Q3 2023 price cap", while network costs rise by only £26 per MWh against a wholesale fall of £112 per MWh1. In January 2023, at the peak of the gas crisis, soaring gas costs meant UK consumers paid four times more for their electricity than two years before under Ofgem's price cap1.
Why it matters for households
The auction result matters because offshore wind is the largest single source in the government's plans for wind power on the UK grid, and the Contracts for Difference scheme is the main route by which such projects are funded. A round that awards no offshore wind capacity means no new projects of that type have been contracted at that point, so the pipeline feeding the 2030 target is thinner than planned1.
For a household, the link runs through the wholesale cost of electricity, which Ember identifies as the largest component of a bill and the part most exposed to gas prices. Its modelling has the wholesale component falling to £65 per MWh by 2030 under delivery of existing commitments, against £89 per MWh if deployment lags, with network costs rising in both cases as grid investment increases1. Ember also frames the trade position as a security question: a 98% clean system would make the UK an exporter of 49 TWh a year, while falling short leaves it importing around 4 TWh and 73 TWh of fossil gas1. The energy price cap remains the mechanism through which wholesale and network costs reach default tariffs, and the Capacity Market pays for firm capacity that backs up variable generation. Ember's figures are modelled projections for 2030, not observed outcomes, and no confirmed timetable for future auction rounds or for the 2030 target appears in the report1.
What happens next
Ember said the government must take immediate action to ensure future auctions secure sufficient capacity, and that the three future renewable auction rounds must each secure 8 GW of offshore wind to reach the 2030 target1. It said project development times could be cut in half by streamlining permitting, reducing grid connection times and ensuring future auctions recognise increased costs facing renewable developers1. No dates for those rounds are given in the report1.
Sources1 cited
- Cutting the bills꞉ UK households profit from clean power | Ember, ember-energy.org