Going into this round, the Government knew that it needed to double the capacity achieved in last year's CFD auction – and then repeat that feat next year – if it is to achieve even the lowest of its targets for 2030.
All of this is being attempted against the headwinds of supply chain issues, rising costs and growing industry and consumer concern about the mounting structural costs of the UK's energy mix.
Not only that, but today's CFD auction round closes one day after the NESO Gate 2 deadline finally closed after a series of delays, meaning that renewable developers across the UK did not know when they would get their grid connections for their schemes but were still expected to bid for CFDs. Uncertainties like that may well have mitigated against the great leap in CFD outcomes UK Government is pinning its hopes on. It remains to be seen whether the improvements made to this round of CFDs, such as increasing the duration of the subsidy to 20 years, and increasing the maximum bid prices, will weigh heavily enough in the other direction.
Developers need certainty, and if they don't get it, they will price accordingly, or not bid at all, and the UK Government's 2030 ambitions will surely turn on how quickly they can deliver that certainty in a rapidly evolving sector.
