The absence of offshore wind projects in this auction can be attributed to a disconnect between the government's price caps and the rising costs in the offshore wind sector. Developers found the government's price cap of £44/MWh, which includes the cost of grid connection, to be too low, making it financially unviable for them to participate. This issue has serious implications for the UK's renewable energy goals and its ability to meet climate targets.

Representatives from the renewable energy industry have expressed concerns about the pricing structure and have called for the government to adjust price caps to account for the increasing costs in the offshore wind sector. They have warned that failure to do so would deter investments in offshore wind projects, hindering the UK's climate goals. Additionally, the UK has already experienced setbacks, with Vattenfall suspending work on their 1.4 GW Norfolk project due to the government's failure to raise the auction price or offer capital allowances. Furthermore, Vattenfall's other projects and Orsted's Hornsea 3 project, set to be the world's largest windfarm at around 3 GW, may also face delays as they work to make the financial numbers work and reach a final investment decision.

The failure to secure new offshore wind projects will result in a shortfall in renewable generation capacity. This shortfall could impact the availability of Renewable Energy Guarantees of Origin (REGO) certificates, potentially leading to higher prices for these certificates. The stoppage of imports of EU Guarantees of Origin (GOs) and the slower development of offshore wind capacity than anticipated have already pushed current year CP22 REGO prices up by more than 100% this year, from £6.66/MWh to £13.83/MWh as shown below (

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). Further failures in CfD auctions, without necessary government policy corrections, may continue to exert pressure on future REGO prices.

Sanity: REGOs: Prices by CP

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fifth Contract for Difference (CfD) auction

 witnessed the allocation of contracts for various renewable energy projects. Solar PV (>5MW) secured contracts at a rate of £47/MWh, onshore wind (>5MW) at £52.29/MWh, Geothermal at £119/MWh, and tidal stream projects at £198/MWh. Notably, the auction failed to elicit any bids from offshore wind developers, a matter of significant concern considering the government's ambitious targets for expanding offshore wind capacity. The absence of offshore wind projects in this auction is particularly worrisome, given the UK's goal of reaching 50 GW of offshore wind capacity by 2030. In contrast, the previous auction had successfully awarded contracts for 7 GW of offshore wind capacity.