The UK government has issued the budget notice for its seventh CfD auction, with solar set to compete with onshore wind for a GBP 135 million ($180 million) pot.
As the two leading onshore technologies, solar and wind are placed in pot 1 of the CfD auction, which will have a GBP 295 million budget to support both technologies. The auction is designed with a ring-fenced GBP 160 million budget for onshore wind and remote island wind, with solar competing for the remaining GBP 135 million in pot one. This is achieved through a minimum budget for the wind technologies and a technical maximum applied to PV to ensure the auction separates the clearing price of solar from other technologies in the pot – in this case a monetary limit of GBP 295 million.
Administrative strike prices for each auction technology list solar as most affordable on a per megawatt hour basis. Strike prices are the guaranteed fixed price that successful bidders will receive for their generation, and the administrative price is a cap set by the government. At GBP 75 per MWh solar’s price is significantly lower than the next lowest administrative strike price – GBP 92 per MWh for onshore wind.
The final strike prices at auction could be even lower still and trade association Solar Energy UK noted that the government’s recent decision to extend CfD contracts from 15 to 20 years lead to lower prices. Solar Energy UK estimated AR7 could support more than 4 GW of capacity.
In a press release, Gemma Grimes, director of policy and delivery at Solar Energy UK, said the budget for solar was “most welcome.”
“Solar energy is the cheapest form of power generation and has never been cheaper,” said Grimes. “We welcome the Government’s continued support for clean, secure and homegrown energy.”
Much depends on the outcome of the seventh and eighth CfD allocation rounds for the UK government. Ambitious deployment targets included in its Clean Power 2030 strategy include 47 GW of solar by the end of the decade, up from 20.7 GW recorded in the most recent government deployment statistics – although these are provisional and subject to revision as more data becomes available.
Speaking to pv magazine in January 2025, Marc Hedin, head of research for UK and Ireland at Aurora Energy Research, described the deployment targets as “at the limit of what's feasible,” meaning big wins for solar at the next two CfD auctions are needed. “If you’re really set on that 2030 year, everything hangs on those two,” he said.
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