UK awards six tidal stream projects with Contracts for Difference in Allocation Round 6

September 3, 2024, by Zerina Maksumic

The UK government has unveiled the results of Allocation Round 6 (AR6) of the contracts for difference (CfD) renewable auction, with six projects across five sites securing contracts to deliver 28 MW of tidal stream capacity at a rate of £172/MWh (approximately $225/Mwh).

AR6 marks the third consecutive renewable auction in the UK with a dedicated ringfence for tidal stream energy, the Marine Energy Council (MEC) said. This approach has established the UK as a leader in tidal stream deployment, with over 130 MW of capacity expected to be operational by 2029.

The strike price in this round is £172/MWh, representing a 34% reduction from the administrative strike price. This is the lowest cost for tidal stream projects contracted since the ringfence was introduced.

The projects awarded contracts in AR6 include HydroWing, which will deliver 10 MW in Wales, while MeyGen (9 MW), Seastar (4 MW), Magallanes (3 MW), and Ocean Star Tidal (2 MW) will collectively contribute 18 MW in Scotland.

Scotland now has 83 MW and Wales 38 MW of contracted tidal stream capacity through the UK’s renewable auctions. No tidal stream project has yet been contracted in England, therefore, MEC said it aims to collaborate with the UK government to distribute tidal stream opportunities more evenly across Great Britain.

According to recent research by Offshore Renewable Energy (ORE) Catapult and Imperial College London (ICL), tidal energy has the potential to provide 11.5 GW to the UK energy system, 11% of the UK’s electricity demand, and tidal stream projects could contribute up to £17 billion to the UK economy by 2050.

Current projects are being deployed with over 80% of their supply chain content sourced domestically. MEC said it aims to ensure that the UK supply chain remains integral to both domestic and international projects.

In March, the UK government initially set a £10 million ringfence for tidal stream in this year’s renewables auction. This amount was increased to £15 million in July.

MEC has called on the government to maintain the ringfence in future auctions, increase the amount to £30 million, and set a 1 GW deployment target for 2035.

“These results represent an important step forward for the tidal stream industry. The UK is now on track to have over 130MW of tidal stream capacity in its waters by 2029. These projects will provide entirely predictable renewable energy and a critical service to the UK energy system,” said Richard Arnold, Policy Director of the MEC.

“The tidal stream ringfence has provided a clear route to market, supporting the industry to grow, create jobs and secure investment into UK supply chains. Maintaining and increasing the size of the ringfence in future rounds will ensure the UK continues to lead in developing, deploying, and exporting tidal stream technology and expertise around the world.”

In its CfD’s Auction Round 5, the UK government allocated £30 million annually for tidal stream projects over 15 years, following a £20 million allocation in 2022. This funding facilitated the addition of 53 MW across 11 projects in 2023, in addition to the previously contracted 40 MW.