The price paid to generate electricity by UK offshore wind farms has been raised by more than 50% as the government tries to entice energy firms to invest.
It comes after an auction for offshore wind projects failed to attract any bids, with firms arguing the price set for electricity generated was too low.
The government has lifted the amount it pays from £44 per MWh to a price up to £73.
It is hoped that more offshore wind capacity will lead to cheaper bills.
Companies have said that the cost of building wind farms has soared because of rising inflation and interest rates, while the maximum price they can charge for the electricity they generate has been relatively low.
Energy firms have told the BBC that electricity produced out at sea would remain cheaper and less prone to shock increases compared with power derived from gas-fired power stations.
The UK is a world leader in offshore wind and is home to the world’s four largest farms, supporting tens of thousands of jobs, which provided 13.8% of the UK’s electricity generation last year, according to government statistics.
But when the government revealed in September that no companies had bid for project contracts, plans to nearly quadruple offshore wind capacity from 13 gigawatts to 50 by 2030 – enough to power every home in the UK – were dealt a heavy blow.
The technology has been described as the “jewel in the UK’s renewable energy crown”, but firms have been hit by higher costs for building offshore farms, with materials such as steel and labour being more expensive.
According to energy companies, the government’s failure to recognise the impact of higher costs led some firms to abandon existing projects, and all operators to boycott the most recent auction.
On Thursday, Claire Coutinho, the Energy Security Secretary, said: “We recognise that there have been global challenges in this sector and our new annual auction allows us to reflect this.”