UK offshore wind auction fails to attract bids

No new, UK, offshore wind projects have been bought by developers at a key government auction, dealing a blow to the UK’s renewable power strategy.


Results showed no bids for new offshore wind farms, but there were deals for solar, tidal and onshore wind projects.


Firms have argued the price set for electricity generated was too low to make offshore wind projects viable.


The government said a “global rise” in inflation impacting supply chains had “presented challenges for projects”.


It said while offshore and floating offshore wind projects did not feature on the agreed deals list, the outcome was “in line with similar results in countries including Germany and Spain”.


The Department for Energy Security and Net Zero said “significant numbers” of solar power, onshore wind, tidal energy schemes, and for the first time, geothermal projects, which use heat from the ground to generate power, had been awarded funding.


But the lack of offshore wind will be a blow to the pledge to deliver 50 gigawatts (GW) of offshore wind by 2030 compared with 14 GW today. Renewable energy groups have said that alternative renewable projects, such as solar, cannot do the heavy lifting in generating the power that offshore wind does.


The technology has been described as a 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.


The UK is a world leader in offshore wind and is home to the world’s largest four farms, supporting tens of thousands of jobs.


The government’s annual auction invites companies to bid to develop renewable energy projects and contracts to supply the UK grid with electricity. The scheme ensures projects receive a guaranteed price from the government for the electricity they will generate, which it is hoped will enable companies to have the confidence to invest.


The deal, called a Contract for Difference (CFD), means, if electricity prices in the future rise above that level, the companies pay the excess back to the Treasury. If prices fall below it the Treasury pays the company the difference.


It was hoped offshore wind in the latest round could have helped generate five gigawatts of power, enough to run five million homes, but wind farm builders had warned for months that the government was not taking into account how much the costs of developing them had soared.

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