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The UK’s government must offer higher prices for offshore wind power generation or miss the capacity targets it has set itself, climate think tank Ember has warned.
The UK incentivizes new wind and solar capacity by guaranteeing minimum long-term prices for the energy produced from such installations via contracts for difference. Yet the prices that the government has been ready to offer recently have fallen short of developers’ funding needs, reducing interest in new projects.
It was because of this discrepancy between developers’ expectations and the government’s budget that the 2023 offshore wind auction yielded no contracts. According to Ember, this needs to change and it needs to change immediately if the UK wants to stay on course to install 50 GW of offshore wind generation capacity by 2030.
There are currently 14.7 GW of offshore wind in operation and another 13.3 GW in the pipeline. That leaves a gap of 22 GW that have to come from somewhere and for that to happen, incentives need to be ramped up.
The UK earlier this year saw two consecutive quarters of wind power overtaking gas and coal as the single-largest source of electricity generation for the first time, per data from Ember quoted by Reuters in April.
In the first quarter of 2024, wind-generated a total of 25.3 terawatt hours of Britain’s electricity, higher than the 23.6 TWh generated from fossil fuel sources, Ember data showed. As a result, wind power generated an average of 39.4% of the UK’s electricity between January and March 2024, versus a 36.2% share of fossil fuel generation.
Wind power generation, however, could begin to dip with warmer and still weather in the summer months, which a couple of years ago saw zero output from wind installations in the UK for a period of two weeks, raising questions about the reliability of the country’s wind energy bet.
By Irina Slav for Oilprice.com
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