‘Major blow’ as UK Government secures no offshore wind projects in crucial auction
Zero offshore wind projects were secured by the UK Government in the country’s latest clean power auction early today - dealing “a major blow” to Scotland and the UK’s renewable energy ambitions.
The Contracts for Difference scheme underpins major renewable energy developments, allowing them to secure investment and build.
Scotland’s large-scale offshore wind projects are central to the UK’s new energy system, replacing old fossil fuel power stations with cheap, clean electricity.
And although 1.7GW of onshore wind power did win contracts to sell power, today’s results “should serve as an indication that urgent reform is needed”, industry body Scottish Renewables said.
The organisation is now calling on the UK Government to heed industry calls about the effect of inflation and rising commodity prices and raise administrative strike prices, which set the maximum amount which each technology can bid, in time for the next auction round in 2024. It must also increase the overall budgets to maximise the delivery of renewables projects and restore investor confidence.
Claire Mack, Chief Executive of Scottish Renewables, said:
“Industry has repeatedly warned of the cost pressures and increased challenges facing developers, but the UK Government failed to heed these warnings and is now seeing the effect of that inaction.
“Today’s results are a major blow and should serve as an indication that urgent reform is needed. Every megawatt of renewable energy which isn’t built right now prolongs our dependence on generation using expensive imported gas, which costs consumers money.
“It’s also bad for Scotland’s energy supply chain, which is trying to transition from oil and gas to renewables and desperately needs a steady stream of projects to make their own investments in skilling up and new technology.”
Today’s auction also failed to return any floating offshore wind, a sector in which Scotland is vying for a world leadership position.
Of the 1.7GW of onshore wind power which was awarded contracts, 98% was in Scotland, clearly demonstrating the country's position as the UK’s clean energy powerhouse. That includes the 224MW Viking scheme in Shetland and the 231MW Strathy South project in Sutherland, planning for which started 14 years ago, in 2009.
Eleven tidal energy projects – a technology in which Scotland does lead internationally – were also awarded contracts, with 58% in Scots waters.
Scottish Renewables CEO Claire Mack continued:
“While the results for tidal may seem impressive, these projects now need to deliver at what are very low prices. It is critical that government support for the sector is continued and more visibility of that longer term aspiration and support is provided.
“As a whole, these results are a terrible look for the UK on the international stage. It is incredibly hard to say we are a world leader in decarbonisation when the central function of the system which delivers that decarbonisation has failed in such a spectacular fashion. As international competition for investment ramps up we have to stay ahead of the curve and these results show we’re just not doing that.
“With the huge pipeline of ScotWind offshore wind projects in Scotland offering £28 billion of investment it is critical that these issues are resolved as soon as possible. Failure to do so will only increase power prices for consumers and reduce the speed at which our industry can cut carbon emissions.”
- A summary of the auction is available in this document. Scottish projects are highlighted in green.