THE UK Government has laid out revised contract terms for offshore wind after a “complete failure” at the last auction saw no bids made.
On Thursday, the Tory government announced that the amount which wind farm builders can charge for the electricity they supply to British homes will be hiked in a bid to “further cement the UK as a world leader in clean energy”.
The prices producers can be paid will be increased from £44/MWh to £73/MWh (66%) for offshore wind and from £116/MWh to £176/MWh (52%) for offshore floating projects ahead of “Allocation Round 6” next year. The UK Government said the change was necessary after inflation interrupted the trend where renewable energy had fallen for years.
Last summer, wind farms could charge less than a third of what they were allowed to charge in 2015.
Industry insiders told the PA news agency that the £73/MWh price is a maximum, and the system incentivises them to compete below this amount, otherwise they risk not having their projects chosen.
It is also less than half the £155 that offshore wind was allowed to charge in the 2015 auction.
The Government wants around 50 gigawatts (GW) of offshore wind turbines installed in British waters by 2030. Only around 14GW have been installed to date.
“We recognise that there have been global challenges in this sector and our new annual auction allows us to reflect this,” said Energy Security Secretary Claire Coutinho (below).
The SNP's energy spokesperson at Westminster, Dave Doogan MP, said: "The UK Government's last auction round was a complete failure, attracting precisely zero bids for offshore wind, so this news comes as no surprise.
"Ultimately, the proof will be in the number of bids taken forward over the next two rounds but with Scottish projects facing some of the highest transmission charges in Europe, there remain some very steep hurdles to be cleared.
"Successive Westminster governments have allowed the National Grid to become outdated and ill-equipped to deal with Scotland's offshore wind potential – and Tory anti net-zero legislation and rhetoric has undermined confidence in the sector.
"Scotland can lead Europe in renewable energy, but we are being hampered by a Westminster government that has struggled to match our ambition and stifled investment with an incompetent auction round and a grid not fit for purpose.”
The news of the price hike was welcomed by the sector.
Claire Mack, the chief executive of Scottish Renewables, said they were pleased with the £73 price as they had “repeatedly warned of the cost pressures and increased challenges facing our industry”.
Mack went on: “Today’s announcement is important because in addition to the social, environmental and economic benefits that renewable energy projects can offer, bringing forward more of these developments will not only deliver affordable electricity and savings to bill-payers but will improve energy security and reduce consumer exposure to high, volatile gas prices.”
Thibaut Cheret, wind and renewables manager at Offshore Energies UK, said: “We are world leaders in offshore wind energy and today’s announcement is part of anchoring its future here in the UK. Nurturing firms’ confidence to invest in Allocation Round 6 is key to delivering robust, innovative projects that boost homegrown energy jobs and our supply chains.”
