‘UK simply hasn’t gone far enough’ to tackle cost issues for offshore wind – as Brits face extra £530m bill by 2030
The UK will fall short of the government’s offshore wind targets this decade, with renewable developers facing serious cost challenges for projects, the industry body Energy UK has warned.
Downing Street is aiming to ramp up offshore wind generation from 14GW to 50GW by the end of the decade, making the energy source the primary power supplier across the UK.
However, Energy UK has calculated the government is not on course to reach this target.
It would not say how much the government needs to invest to tackle these higher costs, and prevent wind energy targets being missed.
It has called on the government to raise funding for the latest auction round for offshore wind, to provide energy firms the opportunity to bid for new developments while factoring in inflationary pressures.
Deputy director Adam Berman said: “Developers are facing challenging investment conditions, but the government simply hasn’t gone far enough in recognising the effect of higher costs in the forthcoming round. The stark reality is that without rapid government intervention, the UK is set to fall short of our clean energy targets.
“We’re calling on the government to revisit the fifth allocation round budget, and to take urgent action to ensure the UK continues to attract crucial international investment. “
Energy UK estimates 27GW of supplies are either in operation or in receipt of a contracts for difference (CfDs) arrangement – the government’s chief mechanism for delivering renewable energy at a low-cost to consumers.
However, it also predicts long lead-in times for offshore wind projects – which require development, planning permission, and transmission to the grid – means the remaining 23GW has to be secured with the next three allocation rounds.
This means the next three auctions will have to deliver a further 23GW of power – working out at a record 8GW each round.
Yet, it warns the current fifth allocation round will, at best, bring forward 3.2GW of new capacity.
It further feared that rising costs and other challenges facing developers of clean energy projects means it is likely the auction will actually bring forward even less capacity than the maximum possible.
The potential shortfall of 4.8GW would be enough to power 5.5m homes annually and could cost customers an extra £530m a year by 2030 – due to the additional need for more expensive imported gas, which would also lead to an extra 6m tonnes of carbon emissions.
Andrew Bowie, minister for nuclear and networks, told City A.M. he was confident the current auction round for offshore wind would be a success.
He said: “The UK is a world leader in offshore wind, with the world’s four largest offshore wind farms and we are making great progress towards our 50GW by 2030 ambition with 14GW operational, another 7.7GW under construction and 6.2GW finalising procurement and preparing for construction.
“As part of this, we are taking significant action to encourage investment in renewable generation, including our renewable energy auctions, which just last year contracted record capacity of almost 11GW of clean energy.”
When approached for comment, a department for energy security and net zero spokesperson said: “We have set ourselves ambitious targets and we are confident we’ll achieve them. We are world-leaders in renewable technologies, being home to the four largest operational offshore wind farms in the world, and the costs of these technologies have been coming down over time.”
“Our plans to power up Britain, combined with the annual auction process now in place, also gives the industry more confidence to invest.”