Contracts for Difference (CFD) auctions invite companies to bid to develop renewable energy projects in the UK and give them a guaranteed minimum price for the electricity they will generate. The system also means that if electricity prices in the future rise above that level, the companies pay the excess back to the treasury.

The last auction in September attracted no developers, with the industry saying that the government had set the price too low to make new projects worth pursuing.

Industry experts had warned that this might be the case after ministers refused to increase the maximum price, despite a 40 per cent rise in the cost of manufacturing and installing turbines.

The maximum strike price has now been increased by 66 per cent for offshore wind projects, from £44/MWh to £73/MWh, and by 52 per cent for floating offshore wind projects, from £116/MWh to £176/MWh, ahead of Allocation Round 6 (AR6) next year. 

As well as today’s rise, the Department...