Zero offshore wind as UK renewables auction flops in huge blow to green power ambitions
Outcome of latest contract-for-difference round confirms industry warnings that terms were too poor to attract bidders
The UK’s latest renewable energy auction failed to award any offshore wind, in a major blow to the nation’s green policy ambitions that confirmed warnings by the industry that it was poised to flop.
The latest contract-for-difference (CfD) power deals awarded today (Friday) included 1.9GW of solar and about 1.5GW of onshore wind, but no fixed-bottom or floating offshore.
The industry had been warning for months that the terms on offer were insufficient for a sector facing massive cost and supply chain pressures since the last round, when 7GW of fixed-bottom offshore was given deals.
The failure to award any CfDs, which are key to underpinning the investment case for multi-billion-pound projects, is a major setback to the UK's ambitions to get 50GW of offshore wind in the water by 2030, up from about 14GW now, a central plank of its net zero agenda.
Peter Lloyd-Williams, an analyst at Westwood Energy, said: "This has been an auction of firsts but no cause for celebration. It's the first of the annual CfD auctions, the first time the government has sought a more modest cost reduction for offshore wind (4%), and the first time that no offshore wind projects have been awarded capacity. The end result is disappointing but hardly surprising.
“The government called the last-minute CfD budget increase of £22m a 'powerful signal' to the energy industry, but the offshore wind industry has responded with a more forceful reply with the outcome of the auction.
“Offshore wind is not as bullish as it once was, and developers have started to leave or reduce their activities in markets where projects are not economically viable. This is a new reality that governments with offshore wind ambitions need to adapt to. Even a vanguard offshore wind market like the UK could risk developers packing up and going elsewhere if the market confidence is not regained.”
The government has pledged to look at the CfD system to see if factors such as non-price criteria can be included, but the industry said that alone may not be enough to fix the issues.