The UK government will set aside GBP 800m annually for the forthcoming AR6 offshore wind tender. This was announced in connection with British Chancellor of the Exchequer Jeremy Hunt’s annual budget presentation on Wednesday.

This means that the British have significantly increased both the numerator and denominator compared to last year’s failed tender. The amount is more than four times as high as the GBP 190m allocated in AR5, while the price ceiling in the tender was already raised by 66% to GBP 73/MHw in 2012 prices. The latter corresponds to around 108 pounds/MWh in daily prices.

However, unlike the industry’s unequivocal enthusiasm when the price cap was raised, the size of the budget is being met with somewhat more restraint.

”However, the Treasury has missed the opportunity to maximise the amount of capacity which the UK could have secured in this year’s auction for new offshore wind farms,” says Dan McGrail, CEO of the industry association Renewable UK.

”We have more than 10 gigawatts of capacity eligible to bid in this summer. Building this is essential if we’re to make up lost ground from last year’s auction and create the substantial pipeline required to accelerate supply chain investment and growth in the UK. This funding will only secure between 3 to 5 gigawatts.”

The organization is therefore calling on the British Chancellor of the Exchequer, Jeremy Hunt, to increase the current budget and aim high in the coming years. The UK has a target of building 50GW of offshore wind by 2030, which Renewable UK believes ”looks unachievable” at the current rate of development, with no projects submitted in the previous round of tenders.

Other observers have the same assessment. Among them is Aurora Energy Research, according to which the allocated amount ”pushes the ambition of delivering 50GW of offshore wind by 2030 even further into the darkness”. While one of the likely bidders, Iberdrola’s UK subsidiary Scottishpower, is also calling for more money to be added to the budget.

”I expect the auction to be hugely competitive. Given the scale of the available pipeline... we would encourage the government to revisit the budget in the light of developments,” says Keith Anderson, CEO of Iberdrola-owned renewable power developer ScottishPower, to several media including Reuters.

Scottishpower has two new projects to bid on, East Anglia 1 and 2 North, totaling 1.7GW. In addition, the Spanish-owned company can also choose to rebid up to 25% of the capacity from East Anglia 3 - which dates back from AR4 in 2022.

Ørsted has already announced that the Danish energy company will use this procedure for Hornsea 3. A good 750MW can thus be re-invited from the large-scale project, for which a final investment decision was made in December. In addition, the troubled developer also has the opportunity to bid on the last project from the Hornsea zone, the 2.6GW Hornsea 4.

The bidding window for AR6 opens on March 27 and runs for three weeks, with the winners expected to be announced around the beginning of July. The projects are set to be constructed in 2027/28 and 2028/29.

In addition to the fixed offshore wind fund, the UK government has set aside funds for two other funds. GBP 120m has been set aside for mature technologies, including onshore wind to compete with solar, while GBP 105m has been set aside for emerging technologies such as floating wind, biomass with carbon capture and geothermal. GBP 10m of this is earmarked for tidal power.