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Disappointment as no bids for offshore wind in latest UK government renewables auction


Wind turbine and solar panel close up Photo: Shutterstock
While solar projects accounted for half of the 3.7 GW of capacity awarded in the UK government’s latest renewables auction, and onshore wind secured more than double the number of projects compared to last year’s round, no bids were received from the offshore wind sector

Photo: Shutterstock

Although a record number of clean energy projects were awarded funding from the UK government’s latest contracts for difference (CfD) auction, there was disappointment as no bids were received for offshore wind projects – a result many industry observers saw as a ‘missed opportunity’ and a ‘wake-up call’ to government.

The CfD scheme is the UK government’s flagship mechanism for supporting new British low-carbon electricity generation projects. It is designed to deliver low-carbon deployment at low cost to consumers – so that when wholesale electricity prices are higher than the price agreed in the CfD, generators pay back the difference. This revenue is passed on to energy suppliers and, over time, is expected to translate to lower bills for consumers while strengthening national energy security and helping the UK achieve net zero, according to the government.


The latest round had budget funding of £227mn, with the government reporting that ‘significant numbers’ of solar power and onshore wind, and a ‘record number’ of tidal energy schemes had secured awards. For the first time, geothermal projects were also successful.


However, offshore and floating offshore wind did not feature in this year’s allocation, with industry observers saying the £44/MWh price floor failed to take into account the sector’s higher development costs due to inflation under current market conditions, leaving projects financially unviable.


Calling the result ‘disappointing’, Co-Chair of the Offshore Wind Industry Council (OWIC), Richard Sandford, said: ‘It’s clear that this year’s auction represents a missed opportunity to strengthen Britain’s energy security and provide low-cost power for consumers. If all the offshore wind projects eligible to bid into this auction had done so, we could have powered the equivalent of more than 5 million British homes a year’. He continued: ‘Lessons must be learned to ensure that the parameters of the auction are set correctly in the future.’


Meanwhile, Greenpeace UK’s Policy Director, Doug Parr, added: ‘This monumental failure is the biggest disaster for clean energy in almost a decade… 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… Offshore wind is one of the cheapest and cleanest forms of power there is… We need urgent reforms to the way these contracts are awarded and smart changes in government policy to unlock private investment and remove planning bottlenecks. If they don’t, the new renewables – which are essential for lowering bills, increasing energy security and slashing emissions – simply won’t get built.’


The UK government defended the auction results, noting that the lack of offshore wind bids was ‘in line with similar results in countries including Germany and Spain, as a result of the global rise in inflation and the impact on supply chains which presented challenges for projects participating in this round’. It insisted that offshore wind ‘remains central’ to its ambitions to decarbonise the UK’s electricity supply and that the goal of building 50 GW of offshore wind capacity by 2030, including up to 5 GW of floating wind, ‘remains firm’.


Making its auction announcement, the UK government instead focused on the ‘record number of successful projects across solar, onshore wind, tidal power and, for the first time, geothermal’.


The government noted that half of this year’s total 3.7 GW of capacity was secured by new solar projects, while onshore wind projects have delivered almost 1.5 GW of capacity and secured more than double the projects (24) than last year’s round (10). The latest round also saw a £10mn ringfenced budget for tidal stream help to return a record 11 projects, with a record capacity of over 50 MW. There are also three winning projects for geothermal for the first time in the scheme’s history, totalling 12 MW of capacity. In total, the round is expected to generate enough electricity to power the equivalent of 2 million homes.


UK injects record sum into Green Climate Fund
In other news, the UK government has provided £1.62bn ($2bn) to the Green Climate Fund, the UK’s largest individual funding commitment towards climate change, at the G20 Summit in India. The investment forms part of the UK’s pledge of £11.6bn committed to international climate finance to fund projects that have a positive impact on climate change.


The Green Climate Fund was established at COP15 following the Copenhagen Accord and is the largest global fund dedicated to reducing global emissions and supporting developing countries. To date, 194 countries are involved in the fund.


G20 looks to triple renewable energy capacity globally by 2030
Meanwhile, in the late stages of the G20 Summit, the G20 countries agreed to ‘pursue and encourage efforts to triple renewable energy capacity globally by 2030’.


Commenting on the announcement, think tank Ember’s Asia Programme Lead, Aditya Lolla said: ‘This is a significant and surprising step forward by the G20. A tripling of global renewable capacity by 2030 is the biggest single action that would keep 1.5 degrees within reach. It creates two important precedents. First, it dramatically increases the odds that a global goal to triple renewables can be agreed at COP28 in December. Second, and most importantly, it creates a necessity for countries to go back and reassess their own plans to make sure they are consistent with a tripling of global renewables.’


He continued: ‘Such an about-turn from Saudi Arabia and Russia to lend support to renewables is very welcome. This is a game-changer for climate action. It is more possible by the day to imagine a clean, global energy system.’