Financial Times | UK renewable energy auction prices plunge

Our thoughts on the Contracts for Difference (CfD) Allocation Round 3 results were quoted in the Financial Times. There was record low clearing prices of the results indicated the continued and rapid cost reductions for offshore wind resulting in competitive auctions.

James Brabben Wholesale Manager at Cornwall Insight pointed out that prices below £40/MWh (in 2011-12 money) are extremely low in the context of previous auctions. Even when converted to 2018 money, these equate to £45.3/MWh in 2023-24 and £47.5/MWh in 2024-25.

The captured wholesale price of wind technologies will fall as more projects come online. This will lead to very low wholesale prices at times of modest system demand in future. By 2023-24, this cannibalisation effect will have grown and our analysis shows that regular levy payments may be still be needed for these wind projects during the life of their CfD contracts.

James Brabben, Wholesale Manager

Financial Times