Energy UK response to DESNZ consultation: Proposed refinements for Allocation Round 8 and future rounds

Executive Summary

Energy UK welcomes this consultation and the opportunity to respond.

It is very positive that the Government is proceeding with minimal changes to the auction to prioritise stability and pace over policy change and that industry feedback has been taken onboard.

Energy UK is broadly supportive of most changes proposed in the consultation. Highlights from our feedback include:

• Surrendered capacity: Energy UK supports the proposal to limit re-bidding, although questions whether the ban should be permanent.
• Hybrid metering: Energy UK agrees with the proposal to introduce a limited form of hybrid metering for AR8 but strongly believes that Government should go further and consider further action to support hybrid metering.
• “Other Deepwater” foundations: Energy UK agrees that the adoption of an additional technology category makes sense, but has concerns around how a third technology will be introduced into the auction and the unintended consequences to the approach set out in the consultation.
• Scheme efficiency improvements: Energy UK strongly supports making the process clearer and simpler, avoiding the complications associated with having five different auction timeline scenarios which can considerably delay allocation rounds and create uncertainty for bidding decisions.
• Preventing delayed CfD start dates: Energy UK does not agree with this proposal without additional criteria being applied to the interpretation of metering information.
• Exclusion of Gate 1 connection agreements: Energy UK agrees with the proposal, asGate 2 projects are more aligned with the strategic coordination of network design, and we support closer alignment between NESO’s connection reform process and the CfD.
• Visibility of sealed bids: Energy UK broadly supports retaining bid stack visibility for fixed bottom offshore wind for AR8, but notes important concerns with maintaining this change in the long-term. In terms of extending this to Pot 1, Energy UK argues there is a much weaker rationale and does not think that the potential benefits outweigh the concerns.

Energy UK considers the following to be essential for AR8:

• Avoiding significant change: We are concerned that the introduction of a gain share mechanism would be counterproductive to the positive steps taken to prioritise stability, as this would subject the CfD and AR8 to further change.

• Avoiding delay: Energy UK notes the importance of timely delivery for this auction, for the Clean Industry Bonus (CIB), and the need for a fixed timeline. Many projects are already consented, have grid connections with early delivery dates, and can start construction as soon as they secure a CfD. Any delay could force supply chain renegotiations and contract repricing, raising costs. A timely AR8 lets shovel-ready projects move ahead, avoids these extra costs, brings economic benefits sooner, and secures capacity that can still contribute to the 2030 Clean Power target.

• The Government should publish the final ClB framework and proceed with legislative changes to shorten timeline ASAP. Energy UK also supports separate round between technologies again for faster delivery, and using pending application process again for offshore wind (if known in advance of round).

If you would like to discuss this response in further detail with Energy UK and its

members, we would welcome further engagement.

Sophie Lethier, Interim Deputy Director: sophie.lethier@energy-uk.org.uk

Oscar Matthews, Policy Executive: oscar.matthews@energy-uk.org.uk