The UK has increased the budget for its current annual renewable energy auction by 50%, raising it to £1.5 billion ($1.92 billion), the Government announced on Wednesday.

The new Labour government, which took office earlier this month, aims to decarbonise the electricity sector by 2030. This ambitious target requires a rapid expansion of renewable energy capacity, particularly in wind and solar power.

To encourage investment, the government invites developers of renewable projects to bid for government-backed price guarantees for the electricity they produce, known as Contracts for Difference (CfD). The addition of £500 million to the £1 billion allocated by the previous Conservative government has pushed this year’s sixth auction budget to a record high.

A higher budget means more projects can be selected and offered contracts that ensure a minimum electricity price. When wholesale electricity prices fall below this minimum, the budget covers the difference; if they are higher, producers pay the difference back to the government.

“This will restore the UK as a global leader in green technologies and provide the infrastructure we need to boost our energy independence, protect taxpayers, and become a clean energy superpower,” said Energy Secretary Ed Miliband in a statement.

Approximately £1.1 billion of the budget will be allocated to offshore wind energy, £185 million to other established technologies such as onshore wind and solar, and £270 million to emerging technologies such as floating offshore wind and tidal energy.

Renewable energy developers and industry groups had urged the new government to increase the available funding, stating that a larger budget was necessary for the country to have any chance of meeting its goal of expanding fixed offshore wind capacity to 55 gigawatts (GW) by 2030, up from the current 15 GW.

Companies such as Iberdrola, Orsted, Equinor, RWE, SSE, and TotalEnergies have projects eligible to bid in the sixth round of auctions.

“This will unlock billions in private investment, support thousands of jobs, bolster our energy security, and generate the affordable green energy we need for decades to come,” said Keith Anderson, CEO of ScottishPower, in another statement.

Analysts at Bernstein pointed out that the budget increase might still be insufficient to meet the target.

“Although the potential budget increase is a step in the right direction, it may still fall short of the UK Government’s target, especially considering the failure of AR5, project cancellations, and the capacity to re-bid,” the analysts said.

The fifth auction (AR5), held in 2023, failed to attract any offshore wind projects as developers deemed the incentives offered to be too low.