By Paul Homewood
AR6 Auction Results
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https://www.gov.uk/government/publications/contracts-for-difference-cfd-allocation-round-6-results
I’ve now worked through some costings for the new batch of CfDs resulting from AR6.
The Market Price used by the LCCC for calculating subsidy payments, has averaged £58.34/MWh between April and August 2024. This is how the LCCC’s calculate it:
The Intermittent Market Reference Price (IMRP) is the GB Day Ahead Hourly Price published by the Intermittent Day Ahead Indices.
The Strike Prices in the DESNZ table above are at 2012 prices; the inflator to July 24 is 1.3926. So, for instance, the current strike price for offshore wind is now £81.98/MWh – this of course will be increased each year in future in line with CPI.
Based on these current prices, the annual subsidy payment to the successful AR6 bidders is projected to be £629 million by the time all projects are up and running in 2030.
In reality, given likely inflation in the meantime, that actual figure could be 10 or 15% higher still.
CfDs are guaranteed for 15 years, so the total subsidy payout at current prices over that period would be over £9 billion.
