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Despite the fact that a record number of renewable energy capacity projects were awarded government funding in the UK’s latest clean energy auction, not a single offshore wind bid featured in the tender in another blow to Britain’s offshore wind ambitions.
A record number of 95 onshore wind, solar, and tidal stream projects in Scotland, England, and Wales won allocations in the fifth Contracts for Difference (CfD) round, for a total of 3.7 gigawatts (GW) of future renewable energy capacity.
“While offshore and floating offshore wind do not feature in this year’s allocation, this is 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,” the UK government said.
The UK is committed to its ambition of securing 50 GW of offshore wind capacity and 5 GW of floating offshore wind by 2030, up from 14 GW total offshore wind capacity now.
In this round for clean power contracts, up to 5 GW of offshore wind was eligible to compete. This could have powered nearly 8 million homes a year and saved consumers $2.5 billion (£2 billion) a year compared to the cost of electricity from gas, RenewableUK association said.
“However, offshore wind projects did not bid into the auction as a result of the maximum price being set too low,” the industry body noted.
Commenting on the results, RenewableUK CEO Dan McGrail said “Industry has warned that rising costs should have been properly priced into this auction. If the UK isn’t offering prices that allow investors to make a return, they will simply invest elsewhere.”
In a sign of the more difficult offshore wind conditions, Swedish utility Vattenfall said in July it was halting the development of a major offshore wind power project in the UK due to surging costs and challenging market conditions pressuring new developments.
Vattenfall will not proceed with the development of the 1.4-GW Norfolk Boreas offshore wind project as the industry has seen cost increases by up to 40%, the company said.
In a response to the latest UK auction results today, RenewableUK’s Executive Director for Policy and Engagement, Ana Musat, said,
“We urgently need Government to provide reassurance that next year’s auction round will offer investable parameters, and that in the longer term a joined-up strategy for maximising the potential of the offshore wind sector is developed.”
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.