UK energy minister signals pause before ninth allocation round

Michael Shanks, the UK Minister for Energy, has announced that the government intends to pause the allocation round auction system ahead of the ninth round. Speaking before Parliament’s Environment and Climate Change Committee, he stated that officials wish to review the process to determine whether more significant changes are required to the contracts for different schemes. The objective is to ensure the framework continues to work effectively for consumers across the country.

Shanks defended the existing contracts for difference mechanism, arguing that it has provided investors with necessary certainty while helping to build projects. He noted that the system benefits consumers by locking in prices lower than wholesale spikes. The minister acknowledged that the previous allocation round seven and the upcoming round eight have operated in broadly the same terms as earlier auctions. However, he emphasised the need to halt before round nine to assess if the current contractual arrangements remain optimal for the market and the public.

The move has drawn criticism from industry bodies concerned about the stability of the investment climate. James Alexander, chief executive of the UK Sustainable Investment and Finance Association, warned that the government’s intention to review the process risks sending a worrying signal about the strength of the UK’s commitment to the energy transition. He described the contracts for difference model as a crucial driver of investment in clean power, which has helped secure record offshore wind capacity. Alexander urged for urgent clarity on the future of the process, cautioning that a lack of certainty could put billions of pounds of capital at risk.