UK faces 'biggest clean energy policy failure' amid fears offshore wind auction to bomb - Recharge

UK faces 'biggest clean energy policy failure' amid fears offshore wind auction to bomb | Recharge

The UK is facing the “biggest failure of clean energy policy” for almost a decade if its latest renewable energy auction bombs as feared tomorrow, warned climate campaigners.

A new round of contract for difference (CfD) power deals are due to be awarded by the UK government in the latest round, known as AR5.

Previous rounds have been dominated by offshore wind – 7GW of almost 11GW of CfDs awarded last year were for fixed-bottom projects – but the industry has been warning for months that funding for the current round, and especially maximum 'strike prices' on offer, are inadequate for projects that are facing massive cost increases and supply chain pressures since the last deals were handed out.

Industry bodies suggest the round risked attracting few or no bidders, and multiple analysts told Recharge they expect the latest auction to mark a big negative shift from the expansionary trajectory of UK offshore wind, which the government hopes will hit 50GW by 2030 up from around 14GW now.

A flop for AR5 would mark “the biggest failure of clean energy policy since 2015” when the CfDs were introduced, said Greenpeace UK policy director Doug Parr, as the environmental group said it feared onshore wind and solar could also struggle.

“The failure arises from an effort to save consumers pennies that will actually cost them pounds. Wind and solar remain vastly cheaper than the alternatives for generating electricity (fossil gas) but are now unlikely to come forward for construction within this auction round,” Parr said.

With the results imminent, the mainstream UK media has seized on the expected negative outcome and flagged its potential to heap more pressure on the Conservative government of Prime Minister Rishi Sunak.

Vattenfall’s UK country manager Lisa Christie was quoted by Sky News as saying: "The economics at the moment simply don't stack up… it's just a very, very difficult market environment for offshore wind developers right now.”

Vattenfall itself sent the most ominous signal over the state of UK offshore earlier this year when it halted its Norfolk Boreas North Sea project – which won a CfD in 2022 – saying it was no longer viable.