Net Zero? No New Offshore Wind for UK

Power bosses say the economics of new offshore wind contracts do not stack up

Alliance News 8 September, 2023 | 11:51AM
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offshore wind farms

No new offshore wind farms have been commissioned in a key auction, dealing a blow to the government's hopes of decarbonising the UK's electricity production.

In the annual auction which lets companies bid to supply the grid with electricity, many onshore wind projects and solar farms bid to get a contract.

However, no offshore wind contracts, seen as the backbone of the UK's green electricity ambitions, were included this year, the government announced.

It puts a dent in ministers' promise to deliver 50 gigawatts of offshore wind by 2030, from 14GW today.

Wind farm builders had warned for months that the government, which sets a maximum price that companies are allowed to charge, was not taking into account how much their costs had soared during the cost-of-living crisis, which has also pushed up prices for businesses.

"The economics simply did not stand up," the chief executive of ScottishPower said on Friday after the result.

Energy and climate change minister Graham Stuart said: "Offshore wind is central to our ambitions to decarbonise our electricity supply and our ambition to build 50GW of offshore wind capacity by 2030, including up to 5GW of floating wind, remains firm.

"The UK installed 300 new turbines last year and we will work with industry to make sure we retain our global leadership in this vital technology."

One industry source said: "There is no offshore wind and that's the backbone of our transition to clean energy and attempts to stop using gas, which must be a worry for Government."

In a press release, the government said that the scheme was "set to deliver 3.7 GW of homegrown energy". It did not mention that last year's auction granted contracts for 11 GW.

The UK has for years been a world leader in offshore wind, second only to China in the amount of power that its turbines can produce.

It has been a major British success story and helped customers save hundreds of millions of pounds during the recent energy crisis.

Experts warned that this could lead to higher energy bills for British households. Producing offshore wind used to be expensive, but after years of innovation and building up scale, the price of supplying wind power to British homes had dropped dramatically.

New offshore wind turbines now produce electricity at a considerably cheaper rate than gas power plants. The price of gas has soared after Russia's full-scale invasion of Ukraine.

Keith Anderson, chief executive of ScottishPower, which is one of the key builders of wind power in the UK, said that offshore wind is still one of the cheapest ways to generate electricity.

"This is a multibillion-pound lost opportunity to deliver low-cost energy for consumers, and a wake-up call for government," he said.

"ScottishPower is in the business of building wind farms and our track record is second-to-none in terms of getting projects over the line when others haven't been able to. But the economics simply did not stand up this time around."

Greenpeace UK's policy director, Doug Parr, said: "This monumental failure is the biggest disaster for clean energy in almost a decade.

"Thanks to cost pressures and inept government policy, this auction round has completely flopped – denying bill payers access to cheap, clean energy and putting the UK's legally binding target of decarbonising power by 2035 in greater jeopardy. It leaves the UK more dependent on expensive, imported fossil gas."

Labour shadow energy security & net zero secretary Ed Miliband said: "Ministers were warned time and again that this would happen, but they did not listen.

"They simply don't understand how to deliver the green sprint, and Rishi Sunak's government is too weak and divided to deliver the clean power Britain needs."

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