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Solar secures more Contracts for Difference than expected

Solar Energy UK 
8 September 2023

A total of 56 solar photovoltaic projects have secured support under the fifth round of the Government’s Contracts for Difference (CfD) scheme.[1]

Their gross capacity comes to 1,928 megawatts, averaging just over 34MW. The smallest is the 7MW Bracon Ash solar farm near Norwich, while the largest is an undisclosed 57MW project from Enso Green Holdings.

The outcome of the fifth allocation round (AR5) for solar is rather better than had anticipated, illustrating its resilience to economic turbulence compared to offshore wind, for which no bids were made.

A total of 95 winning bids were made across wind, solar PV, remote island wind, geothermal and tidal stream sectors. Solar’s administrative strike price, indexed to 2012, came in at £47 per megawatt-hour, just under onshore wind’s, at £52. Less well-established geothermal and tidal stream technologies secured contracts at £119 and £198 respectively.

Solar farms only became eligible for CfDs in the fourth allocation round (AR4), which concluded in July last year.[2] Of the 93 projects supported in 2022, 63 were photovoltaic, with an anticipated installed capacity coming to 2,209MW.

“We are pleased that so many solar projects have been successful in AR5, particularly as solar has only recently been able to participate. This shows how resilient solar has become to economic shocks. It remains the cheapest way to generate power in the UK.[3] That said, we need to be roughly doubling the pace of solar installations to meet the Government’s capacity target of 70GW by 2035,” said Chris Hewett, Chief Executive of Solar Energy UK.

“CfDs are far from the only route to market for utility-scale solar. Some developers will prefer to sell on a merchant basis or seek a long term power purchase agreement. The AR5 results are therefore not a cap on deployment of solar farms and we are seeing record high rooftop solar installation in 2023,” he added.

The absence of contracts for offshore wind power is clearly an indication that AR5 was unbalanced, the result of inflationary pressures on the renewables industry falling much harder on that sector compared to solar.

“We need to be confident that the CfD regime creates a market for all renewables. So the design of this round has not been as successful as it should have been,” Hewett added.

Considering the vastly lower cost of renewables compared to gas generation, Solar Energy UK would like to see changes made to increase the deployment of all renewables in the AR6 round next year. This should in turn increase the deployment of grid-scale energy storage systems.

[1] Contracts for Difference (CfD) Allocation Round 5: results

[2] Contracts for Difference (CfD) Allocation Round 4: results

[3] Large-scale solar provides cheapest power, says Government report

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Editor’s notes:

For more information or to request an interview, please contact:

Gareth Simkins, Senior Communications Adviser | |

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