Blow for green energy plans, as no companies are bidding for offshore wind contracts

The government’s green energy plans have been dealt a blow after companies rejected an auction for contracts to operate new offshore wind farms.

There were successful bids for onshore wind, solar, tidal and geothermal projects to supply the grid with electricity.

However, there was none for offshore turbines, which form the backbone of the UK’s renewable energy system.

Insiders had warned that the process had struggled to attract bidders because the government has set the maximum price generators can receive as too low, failing to reflect the rising costs of manufacturing and installing turbines.

The industry has been hit by inflation that has seen the price of steel rise by 40%, pressure on the supply chain and increases in financing costs.

This year, offshore wind turbine manufacturers received a maximum bid of £44 per megawatt hour (MWh) of electricity, compared to £155 per MWh in 2015, based on adjusted figures.

The result of the auction is a setback for ministers’ pledge to deliver 50 gigawatts (GW) of offshore wind by 2030, up from 14 GW currently.

Energy and Climate Change Minister Graham Stuart said: “We are delighted that our first annual Contracts for Difference auction has seen a record number of successful projects across solar, onshore wind, tidal and, for the first time, geothermal.

“Offshore wind is central to our ambitions to decarbonise our electricity supply and our ambition to build 50GW of offshore wind capacity by 2030, including up to 5GW of floating wind, remains firm.

“The UK installed 300 new turbines last year and we will work with industry to ensure we maintain our global leadership in this vital technology.”

In May, trade body EnergyUK warned that this year’s auction “will fall far short of delivering the expansion of offshore wind needed to meet the government’s target” for Britain to build 50 gigawatts of offshore wind capacity by 2030.

Keith Anderson, chief executive of ScottishPower, one of the main developers of wind power in the UK, said: “This is a missed multi-billion pound opportunity to deliver low-cost energy to consumers and a wake-up call for government.

“ScottishPower is in the business of building wind farms and our track record is second to none in terms of getting projects over the line when others have not been able to. But the economy just wasn’t there this time.”

“We need to get back on track and consider how we unlock billions of investment in what remains one of the cheapest ways to generate power and meet the UK’s long-term offshore wind ambitions for the future.”

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Labour’s Ed Miliband branded the outcome of the auction an “energy security disaster” that would push up household bills.

The shadow energy security secretary said: “The Conservatives have now smashed the industry that was meant to be the crown jewels of the UK energy system, blocking the cheap, clean, home-grown power we need.

“The ministers were warned time and time again that this would happen, but they did not listen.

“They simply don’t understand how to deliver the green sprint and Rishi Sunak’s government is too weak and divided to deliver the clean power Britain needs.”

Greenpeace UK policy director Doug Parr said: “This monumental failure is the biggest disaster for clean energy in nearly a decade.

“Thanks to cost pressures and inept government policy, this round of auctions is a complete flop – denying bill payers access to cheap, clean energy and putting the UK’s legally binding target to decarbonize electricity by 2035 at greater risk.

“It leaves the UK more dependent on expensive, imported fossil gas.”

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