London raises AR7 strike price caps

UK energy department DESNZ has increased the strike price caps for wind technologies in the upcoming AR7 Contracts for Difference round.

Administrative Strike Prices (ASPs) have been lifted for fixed and floating offshore wind as well as for onshore and remote island wind compared to last year’s AR6 auction, while solar has been set a lower bid ceiling.

London has also introduced a mechanism to enable separate clearing prices fixed-bottom offshore wind in Scotland. Plans to afford Scottish projects bidding headroom in AR7 to account for grid charges were first reported in the subscriber-only reNEWS on 5 June.

The ASPs for this year’s CfD auction have been set in 2024 prices, which the department has asked industry to use in their bid submissions.

For fixed-bottom offshore wind the ASP is £113 per megawatt-hour (MWh) and for floating wind the cap is £271/MWh, based on 2024 prices.

Onshore and remote island wind have been set at £92/MWh in 2024 prices, while the solar ASP is £75/MWh.

DESNZ has in previous CfD rounds used 2012 prices to model the ASPs, and has provided an “illustrative comparison” of how the AR7 prices would measure up against last year’s auction using the 2012 benchmark.

For fixed-bottom offshore wind, this would be £81/MWh in AR7, up from £73/MWh in AR6.

Floating wind corresponds to £194/MWh in AR7 compared to £176/MWh last year.

Onshore and remote island wind would both equate to £66/MWh in 2012 prices, compared to £64/MWh in AR6, while solar falls from £61/MWh last time out to £54/MWh in AR7 based on the older price model.

Meanwhile, fixed-bottom and floating offshore wind technologies will each have their own dedicated pots in the auction – Pot 3 and Pot 4, respectively.

They are set to run separately to all other technologies in a separate auction stream this year (AR7 for offshore wind, and AR7a for all other types of energy generation).

London has also confirmed a maxima will be applied to Pot 3 to separate the clearing prices of Scottish fixed-bottom offshore wind projects from those in other parts of the country.

Onshore and remote island wind will continue to compete against solar in Pot 1, while tidal stream and wave energy will feature in Pot 2.

The application window for the CfD round is scheduled to launch on 7 August.

Source: reNews

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