AR8: A different kind of auction
This content is AI generated, click here to find out more about Transpose™.
For terms of use click here.
What makes Allocation Round 8 (AR8) different and what this means for the Contract for Difference (CfD) auction
The UK Government has introduced significant changes to the design of AR8, changing how renewable projects will be assessed, how budgets can be allocated and how different technologies compete for contracts.
With Clean Power 2030 targets still requiring significant additional renewable capacity, AR8 will play an important role in determining which projects progress and at what price. But unlike previous auctions, the outcome will depend not only on project economics and strike prices, but also on how government assesses value for money for consumers across different technology pots.
“No single scenario is perfect – Government and auction participants should test multiple scenarios”
In this report, LCP Delta analyses the eligible project pipeline, project economics and auction dynamics to assess how AR8 could clear across renewable technologies to help participants maximise their chances of developing a winning bidding strategy.
Who should read this report?
It will be particularly relevant to developers and investors preparing for AR8, as well as organisations seeking to understand how the auction's new value-for-money approach could affect procurement across technologies.
Understand the AR8 auction
Read the public reportSpark subscribers can access the complete report, including detailed modelling of the AR8 eligible pipeline, project economics, auction dynamics and consumer value.
Read the full report on SparkSubscribe to our thinking
Get relevant insights, leading perspectives and event invitations delivered right to your inbox. Get started to select your preferences.
What could AR8 mean for consumers?
Our central analysis indicates that renewable generation procured through AR8 could deliver more than £11bn in consumer savings between 2027 and 2050.
The savings are primarily driven by lower wholesale electricity costs as additional renewable generation displaces more expensive thermal generation. These benefits are partly offset by higher CfD and other system costs.
LCP Delta central scenario. Results are sensitive to the counterfactual and assumptions around future renewable deployment.
Central Strike Price maximising consumer benefit1
1. All prices £(real 2024)/MWh
-
Solar PV
£68/MWh -
Onshore Wind
£86/MWh -
Fixed-bottom Offshore Wind
£92/MWh -
Floating or deep-water offshore wind
£206/MWh
