‘An opportunity missed’ – budget ‘doesn’t do enough for offshore wind’

Aurora Energy Research senior associate power and renewables Ashutosh Padelkar said, “The Spring Budget puts the government’s ambition of delivering 50 GW of offshore wind by 2030 increasingly out of reach. More than 18 GW of offshore wind capacity would need to be procured in AR7. 

“Even with a budget of more than £1Bn and £800M for offshore wind, AR6 will procure between 3 GW and 6 GW of offshore wind, assuming strike prices between £73 per MWh and £50/MWh.

“If Berwick Bank secures planning consent before the allocation round, around 14 GW of offshore wind capacity could be eligible but less than half of this will secure contracts.

“The primary reason why AR6 will fail to secure significant amounts of offshore wind capacity is that despite industry feedback, the government has reduced the reference price for the final delivery year from £27.79/MWh in AR5 to £24.13/MWh.”

Scottish Renewables chief executive Claire Mack said the funding allocated to offshore wind “is not fully aligned with the increase in deployment required to meet the UK government’s stated ambition of deploying 50 GW of offshore wind by 2030. 

“Industry was seeking a budget and framework that would repair the damage to the UK pipeline from last year’s empty offshore auction. We continue to urge ministers to work with industry in the months ahead to ensure this is delivered so the AR6 budget matches the enormous economic potential of all renewable energy technologies.

“Meanwhile, we are pleased the UK government has committed to invest around £400M in the offshore wind supply chain and electricity networks through GIGA and look forward to working closely with the government to determine how this funding can be best utilised in the years ahead.”

ScottishPower chief executive Keith Anderson said, “After the failure of last year’s auction to attract any bids for new offshore projects, today’s announcement is an important test of the government’s resolve to get back on track with its own green energy targets.

“The government has taken a major step in the right direction today by quadrupling the available budget, a clear statement of intent in ramping up the ambition to bring cheaper, greener energy onto the system quickly. 

“I expect the auction to be hugely competitive. Given the scale of the available pipeline, there is always the opportunity to go further, and so we would encourage the government to revisit the budget in the light of developments.”

In comments on social media, RenewableUK executive director policy and engagement Ana Musat said, “There is still some scope to make AR6 go further. A budget revision needs to happen over the summer to ensure any new capacity that may become available is accounted for. A few GW of offshore wind could still be consented by then, so there is an opportunity to aim for more of the pipeline to clear. 

“Different auction mechanics – such as realistic reference prices and load factors – could see most of the pipeline procured with the same budget. However, we might still be looking at 5 GW or more that will simply have to wait for AR7, which will truly need to be a bumper auction. 

“In the longer term, we need to consider how best to preserve the benefits of competitive allocation while ensuring we will be able to procure at least 7GW/year from now to 2030, as would be needed to achieve our offshore wind targets. It might be time to consider a hurdle-rate model.”

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