Offshore windfarm contracts to fuel 12m homes in Great Britain after record auction | Renewable energy
Enough offshore wind farms to power 12 million homes have been awarded subsidy contracts in an auction aimed at the UK government’s target of creating a clean electricity system by 2030.
In Great Britain’s most competitive renewable subsidy auction to date, energy companies competed for contracts that guarantee the price of every unit of clean electricity they produce.
Contracts have been awarded to eight new offshore farms after ministers doubled the amount of funding available to developers to help them produce projects worth £22bn.
The government expects the investment to support 7,000 skilled jobs and has promised its clean energy agenda will help reduce energy bills altogether.
The funding was awarded to offshore wind farms with a total capacity of 8.4 gigawatts (GW), or enough capacity to produce clean electricity for more than 12 million British homes by the end of the decade.
These included standard wind farms fixed to the seabed and a new generation of floating wind farms that could help the UK build projects in much deeper parts of the North Sea.
Standard wind farms were given a contract price of £89.49 per megawatt-hour (MWh) at 2024 prices for those in Scotland and £91.20/MWh for those in England and Wales. Two floating wind farms have been awarded a contract worth £216.49/MWh.
Energy Secretary Ed Miliband said: “We have secured a record-breaking 8.4GW of offshore wind… This is the largest quantity of offshore wind ever supplied at any auction in Britain or Europe.”
He called it “an important step towards clean energy by 2030” and added: “The price secured in this auction is 40% lower than the alternative cost of building and operating a new gas plant. Clean, self-generated energy is the right choice to cut bills completely and this auction will create thousands of jobs across Britain.”
The most successful energy company in the tender was German utility RWE, which signed contracts for almost 7 GW of the total 8.4 GW of offshore wind projects, including the Dogger Bank South and Norfolk Vanguard wind farms. Shares of the 36 billion euro company were up almost 1.5% on Wednesday morning.
SSE has also been awarded the contract for the first phase of the massive 4.1GW Berwick Bank project off the coast of Scotland. The London-listed company’s market capitalization rose in early trading and settled at a 0.5% gain by midday trading.
Although the prices of the winning bids were higher than in previous years and above the typical price of electricity in the wholesale electricity market, which is currently around £81/MWh, experts say the growth of wind power in the UK energy system could help keep bills low as it would reduce the market price by limiting the use of expensive gas plants.
The government said investing in locally produced renewable electricity would also help reduce the UK’s exposure to volatile global fossil fuel markets, which have contributed to record-high energy debts and cost inflation in the UK economy.
The success of the auction was vital if the government hopes to deliver on its election promise to double onshore wind power, triple solar power and quadruple offshore wind by 2030, with the aim of creating a nearly zero-carbon electricity system by the end of the decade.
But if the government hopes to meet its target of committing 43GW to 50GW of offshore wind by 2030, it will need to repeat the results of the record-breaking auction by securing another 8GW of offshore wind power at similar prices in next year’s allocation round.
Andy Prendergast, national secretary of the GMB union, said the “real litmus test” of the auction’s success will be “whether it delivers on the work that is often promised and often fails to deliver”.
“This is a golden opportunity to create real employment opportunities across coastal supply chains and the UK. It is imperative that we seize it,” Prendergast said.
The UK government has faced criticism for accelerating investment in offshore wind at a time when the technology faces higher costs. Supporters of the industry have argued that rapid investment is important to replace Britain’s aging nuclear and gas power stations, with around half of them set to close before 2035.
“Investing in renewable energy is also crucial to keeping up with the UK’s greater energy needs,” said RenewableUK policy director Ana Musat. “Electricity demand is expected to increase significantly in the coming years as existing nuclear and gas capacity retires, so the 8.4 GW of contracts awarded today will be crucial for economic growth.”
