UK Government increases maximum price for offshore wind
The UK Government has increased the maximum price for offshore wind in an effort to recover from the failure to secure new projects earlier this year.
The strike price – a guaranteed price to be paid to wholesale generators of electricity – has been increased by 66 per cent for offshore wind developments, up to £73 per megawatt hour.
The price for floating wind farms has also increased by 52 per cent to £176/MWh.
Ministers hope the move will encourage developers to bid in the next Contracts for Difference auction round, AR6.
Energy secretary Claire Coutinho said: “We recognise that there have been global challenges in this sector and our new annual auction allows us to reflect this.
“This is a vital part of our plan to have enough homegrown clean energy, bringing bills down for families and strengthening our energy independence.”
The change follows the failure of the last round to get any bids from offshore wind developers, despite industry warnings that the strike price was too low.
Contracts for Difference were established in 2014 to bring price stability and predictability to the sector, but the previous maximum strike price of £44/MWh was not considered enough for developers to cover the cost of construction.
The announcement has been welcomed by the industry body in Scotland, Scottish Renewables.
Chief executive Claire Mack said: “Scottish Renewables has repeatedly warned of the cost pressures and increased challenges facing our industry so we’re pleased the UK Government has responded by delivering administrative strike prices which should go a long way to restoring investor confidence in the Contracts for Difference scheme as a viable route to market for offshore wind.”
The UK Government set a target to reach 50GW capacity in offshore wind by 2030. Currently capacity is just under 14GW.
The Scottish Government has a separate target to reach 11GW of capacity by 2030.