‘Biggest clean energy disaster in years’: UK auction secures no offshore windfarms - The Guardian

‘Biggest clean energy disaster in years’: UK auction secures no offshore windfarms | Wind power | The Guardian

No new offshore windfarms will go ahead in the UK after the latest government auction, in what critics have called the biggest clean energy policy failure in almost a decade.

Britain’s offshore wind industry suffered a blow after ministers failed to heed warnings from some of the world’s biggest renewable energy developers that the annual auction was set too low to reflect their soaring costs. No energy companies submitted bids for offshore wind projects, the government confirmed on Friday morning.

The three biggest offshore wind developers in the UK – SSE, ScottishPower and the Swedish company Vattenfall – were forced to sit out the bidding after ministers refused to increase the maximum price for the auction despite a 40% increase in the cost of manufacturing and installing turbines because of inflation.

Keith Anderson, the chief executive of ScottishPower, said: “This is a multibillion-pound lost opportunity to deliver low-cost energy for consumers and a wake-up call for government.

“We all want the same thing – to get more secure, low-cost green offshore wind built in our waters. ScottishPower is in the business of building windfarms and our track record is second to none in terms of getting projects over the line when others haven’t been able to. But the economics simply did not stand up this time around.”

The government’s failure to secure any new offshore windfarms was described by Greenpeace as “the biggest disaster for clean energy policy in the last eight years” because it risked jeopardising the UK’s plan to triple its offshore wind power capacity by 2030, and cast doubt on Britain’s climate targets.

However, the lack of interest was widely expected, with sources warning on Thursday night that the maximum price had been set too low to attract any bidders.

Renewable energy developers were required to submit sealed bids in the auction in the first half of August, before officials ranked the most competitive proposals over the second half of the month. Only the projects offering the lowest cost to energy-bill payers would secure contracts.

But the companies and industry groups had consistently called on the government to take the higher costs into account by adjusting the maximum price they could receive, since Vattenfall announced that it would cease working on the multibillion-pound Norfolk Boreas windfarm because rising costs meant it was no longer profitable.
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Ana Musat, RenewableUK’s executive director, told the Guardian earlier this week that the “perfectly avoidable” financial dilemma facing the British wind industry risked removing the UK’s global lead in offshore wind at a time of increased competition from the US, Europe and parts of Asia.

“We can’t have a ‘boom and bust’ cycle and expect to maintain investor confidence in the UK and grow our supply chains,” Musat said. “It’s such a shame – we’ve been world-leading in this. But we do need to evolve the tools which brought us here.”