Redefines the cost of electricity generation
The United Kingdom announced the results of Allocation Round 7 (AR7) of the Contracts for Difference (CfD) scheme, awarding a record 14.7 GW of new clean capacity between solar, onshore wind, offshore wind and tidal power.
The magnitude of the auction not only makes it the largest in UK history, but also redefines the economic break-even point between renewables and gas-fired generation.
The volume awarded is equivalent to enough energy to power 16 million homes, consolidating the UK’s goal of achieving a mostly clean electricity system by 2030.
Record solar: 4.9 GW consolidate structural change
The most relevant data from the auction is the award of 4.9 GW of solar distributed among 157 projects, the largest solar procurement ever made in the UK under the CfD scheme.
This volume confirms that solar energy has gone from being complementary to becoming a structural pillar of the British electricity system, especially because of its economic competitiveness. The agreed price was £65.23/MWh, well below the estimated cost of new gas-fired plants.
In addition, the West Burton solar park, located on the former site of the country’s last coal-fired power station, symbolizes the structural transformation of the British energy mix.
Onshore and offshore wind: scale and industrial returns
Onshore wind secured 1.3 GW across 28 projects, including the Imerys farm in Cornwall, the largest successful project in England in a decade, marking the revival of a sector that was limited by previous regulatory restrictions.
In parallel, offshore wind (fixed and floating) awarded 8.4 GW in 12 projects, consolidating the UK’s European leadership in offshore wind and strengthening national energy security.
New onshore wind was priced at £72.24/MWh, also more than 50% below the cost of gas-fired generation (£147/MWh), radically changing the technology competitiveness narrative.
The real tipping point: price and energy integrity
Beyond the record capacity, the strategic element is the cost differential versus natural gas. With renewables awarded at less than half the cost of gas, the UK not only decarbonizes, but also reduces exposure to the volatility of international markets.
The CfD scheme is once again proving its effectiveness as an industrial and financial policy instrument, providing certainty to investors and unlocking approximately £5 billion in additional private investment, as well as generating up to 10,000 jobs.
This result positions the United Kingdom as one of the most advanced electricity markets in terms of massive integration of renewables, with a regulatory architecture capable of combining energy security, economic competitiveness and decarbonization.
Source: https://www.gov.uk
Photo: Shutterstock