Britain's wind auction drew zero bids, so it raised the price cap and reran the round

Britain allocates renewable energy support through annual reverse auctions: developers bid the lowest price at which they will build, win a 15-year two-sided Contract for Difference, and compete until the budget is spent. Between 2015 and 2023 the government cut the maximum allowed offshore wind bid every single round — from £140/MWh in the first auction to £44/MWh in Allocation Round 5 — proudly chasing the cost curve downward.

Then costs went the other way. Post-pandemic inflation and interest rates raised offshore wind supply-chain costs by 20–40%, while the 2023 cap stayed at £44 in 2012 prices. In September 2023, Allocation Round 5 closed with not one offshore wind bid — solar, onshore wind and tidal projects still bid, but the sector's flagship technology sat out. SSE's chief executive said it flatly: the prices were just set too low.

The government's answer, announced that November, was to re-price rather than retreat: the offshore cap up 66% to £73/MWh, floating wind up 52% to £176, and (under the next government) the budget raised by £500 million to a record ~£1.56 billion including £1.1 billion for offshore wind. In September 2024, Allocation Round 6 awarded a record 131 projects totalling almost 10 GW — among them nine offshore wind farms, led by Ørsted's 2.4 GW Hornsea 4.

An auction only works when the cap clears

The zero-bid outcome was the auction working, not failing: bidders refused contracts below cost, so the state avoided locking in unbuildable projects.

A capped price was the real constraint — once lifted above cost, the competitive pressure inside the auction still pushed awards below the new cap.

The two-sided CfD kept consumers protected: when market prices run above the strike price, generators pay the difference back.

Re-running with a credible cap preserved the allocation mechanism that had cut offshore wind prices for a decade, instead of replacing it with discretionary grants.

A reserve price is a bet that costs keep falling; recalibrate when input costs reverse. Zero bids are a legible, cheap failure — re-price and rerun, don't abandon competitive allocation.

The repaired auction was vindicated by the next round: Allocation Round 7, announced in January 2026 with a £1.79 billion budget, drew a record 19 eligible projects totalling 24 GW and awarded 8.4 GW of offshore wind — the largest European offshore auction to date — with fixed-bottom strike prices of £91.20/MWh in England and Wales and £89.49/MWh in Scotland, about 40% below the cost of new gas power.