The results of Allocation Round 6 (AR6) of the Contracts for Difference (CfD) scheme were announced on September 3rd, 2024. In total, 9.6 GW of renewable energy projects won contracts. While batteries cannot participate in the scheme directly, 1.4 GW of battery energy storage capacity could be co-located with sites that have won contracts.
The CfD scheme in Great Britain is a government program designed to support the development of low-carbon electricity generation. Generators awarded contracts receive a strike price, which means they have a guaranteed price for their generation. Our results article for Allocation Round 4 explains this in more detail.
Following changes to rules and guidance during Allocation Round 4, it is now easier for eligible generators to co-locate with battery energy storage systems.
Offshore wind recovers from absence in AR5
A total of 9.6 GW of projects won contracts in AR6. In AR5, no offshore wind projects entered the auction due to concerns about the Administrative Strike Price being too low. This was increased for AR6, and subsequently, offshore wind projects won 5.3 GW of contracts.
400 MW of offshore wind capacity came from floating offshore wind. 1.6 GW of offshore wind capacity winning contracts in AR6 came from projects that had previously won contracts in AR4 - the largest of these contracts is 1.1 GW for Hornsea Three.
Generators could withdraw up to 25% of the capacity awarded in previous rounds and reallocate this to AR6. This means the 1.1 GW from Hornsea Three will now receive the AR6 strike price of £54.23/MWh instead of the AR4 strike price of £37.35/MWh for offshore wind.
Meanwhile 3.3 GW of solar projects won contracts in AR6, the highest of all allocation rounds.
Hornsea offshore wind farm sees Orsted lead in AR6 capacity
Regarding new capacity entering the CfD scheme, Orsted represents 30% of capacity winning contracts in AR6. This comes from the 2.4 GW Hornsea Four project, contracted to start operations in 2028.
Overall, Hornsea Four has the second-highest capacity awarded to a single project in any allocation round. Its predecessor, Hornsea Three, was the largest at 2.9 GW in AR4. Scottish Power Renewables has the next largest new capacity in AR6. It received a 963 MW contract for its offshore wind farm project East Anglia Two, Phase 1.
1.4 GW of battery capacity could be co-located with wind and solar projects from AR6 of the CfD
Of the projects that won contracts in AR6, 5 GW could be co-located with battery energy storage. This is based on data from the Renewable Energy Planning Database (REPD) or information released by the generator provider.
The capacity of a project awarded a CfD contract may not always reflect the expected nameplate capacity of the project. In this case, generator capacity here reflects the maximum capacity that has been recorded through the CfD, REPD, or company websites.
In AR6, sites with a known planned battery capacity had a ratio of 60 MW of battery capacity for every 100 MW of solar generation capacity (down from 85 MW in AR4). This same ratio has been assumed for batteries shown as planned for co-location but with no capacity given.
For wind projects, the ratio was 25 MW of battery capacity for every 100 MW of wind generation capacity, the same as in AR4.
In total, 1.4 GW of battery capacity could be co-located with renewable projects that won contracts in AR6 could exceed 1.4 GW.
EDF Energy Renewables could own the biggest battery to co-locate with renewables from CfD AR6
EDF Energy Renewables is developing a 500 MW solar farm called Longfield Solar Energy Farm. The site has planning permission for a co-located battery, but this does not yet have a stated capacity. Based on the ratios for known battery capacities from AR6, this system would have a capacity of 300 MW. If the battery is sized to match the solar generation, it could even be up to 500 MW.
Subscribers to Benchmarking Pro GB can download the data behind this chart at the end of the article.
As a result, EDF Energy Renewables has the highest potential battery capacity co-located with renewables from AR6.
Ørsted follows shortly behind, with the 300 MW battery it plans to co-locate with the Hornsea Three project. As mentioned, the Hornsea Three offshore wind farm was initially awarded a 2.9 GW contract at AR4.
Enso Energy has the third highest estimated capacity with a portfolio of four solar sites co-located with battery energy storage.
750 MW of battery capacity could be co-located with projects from AR5
Following the results of AR5, we did not conduct this analysis on those projects. Therefore, we have included this analysis here. 3.6 GW of projects won contracts in AR5. Of this, 1.1 GW is expected to be co-located with battery energy storage capacity (based on expected nameplate capacity).
Few of the planned batteries from Ar5 have stated capacities. Therefore, for those without, an estimate has been used based on an average of the ratios from AR4 and AR6.
Following changes to rules and guidance during
Total battery capacity to be co-located with CfD-backed renewables from AR4 onwards could reach 3 GW
Across allocation rounds four to six, the total capacity from batteries that could be co-located with CfD-backed renewables totals 3.1 GW.
Generators in the CfD have dates by which they should target commissioning to receive their payments. As the co-located battery isn’t part of the agreement, the battery does not have to be online by the time of the generator’s commissioning date.
So far, none of the batteries expected to be co-located with renewables from AR4 have begun commercial operations.
The number of battery projects co-located with CfD renewables could reach 11x the number of currently existing co-located projects
Currently, eight co-located battery sites with a capacity of 7 MW or more are commercially operational in Great Britain. 77 sites from AR4 to AR6 may be co-located with battery energy storage. Based on the target commissioning date of the associated generators, these batteries could all be online by 2028. These sites will be located across England and Scotland.
Looking ahead
Allocation Round 7 is scheduled for 2025. In March 2024, the consultation on amendments for AR7 was closed. Topics raised included:
- Repowering Projects: There were proposals to include repowered renewable energy projects within the CfD, allowing old projects to be refurbished and re-entered.
- Co-located generation and hybrid metering: This considers making changes to metering to simplify how projects can co-locate.
Other topics include protection against inflation and streamlining the appeals process.
Many providers are already taking advantage of the opportunity to co-locate their sites with battery energy storage. Further simplifying the process here will likely encourage more co-location with battery energy storage at AR7.
Download the co-located battery list
Benchmarking Pro subscribers can click below to download the list of batteries from AR4 - AR6 that could be co-located with a CfD renewable project.