In a staggering display of policy missteps, the United Kingdom's most recent government auction for renewable energy projects closed without securing a new offshore wind farm. Experts are decrying the event as the worst failure in clean energy strategies in nearly a decade.
Shockingly, zero corporations interested in establishing large-scale offshore wind projects in UK waters participated in the annual auction. These auctions usually grant 15-year contracts at a fixed rate for producing renewable electricity.
Why, you ask? Because the key players had been vocal, warning the government repeatedly, the auction price point was not lucrative enough. The costs for these wind energy projects have skyrocketed—an astounding 40% inflation in the supply chain alone. As a result, the Labour Party argues that not only could this be a monumental loss in potential investments, but it may also mean steeper utility bills for average households.
Initially, the auction could have brought forth projects with a whopping capacity of up to 5 gigawatts of offshore wind power. Imagine: that's enough to power nearly 8 million homes annually and save consumers £2 billion annually compared to gas-generated electricity. But alas, the government confirmed a mere 3.7GW in new clean energy contracts, dealing a heavy blow to the UK's clean energy aspirations.
Although the auction did include some successful projects—think solar farms, onshore wind projects, pioneering geothermal schemes, and an unprecedented number of tidal power systems—the glaring absence of new offshore wind farms complicates the UK's journey towards meeting its climate objectives. Insiders disclosed that big names like SSE, ScottishPower, and Swedish company Vattenfall had no choice but to bow out due to the government's refusal to adjust the auction price.
Swedish giant Vattenfall announced halting work on its Norfolk Boreas wind farm in July. Why? Because it just didn't make financial sense anymore.
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," Anderson said. "But the economics simply did not stand up this time around." Ed Miliband, the shadow energy security and net zero secretary, said: "The Conservatives have now trashed the industry that was meant to be the crown jewels of the British energy system – blocking the cheap, clean, homegrown power we need.
"Ministers were warned time and 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." Sam Richards, the founder and campaign director of Britain Remade, which campaigns for economic growth in Britain, said the "catastrophic outcome" of the auction was "the direct result of the government's complacency and incompetence".
He said: "This will condemn consumers to higher bills than necessary and means Britain loses out on vital jobs and billions in investment."
The energy and climate change minister Graham Stuart said the government was delighted that the auction had secured "a record number of successful projects across solar, onshore wind, tidal power and, for the first time, geothermal". Stuart said the government would work with the offshore wind industry to retain the sector's global leadership.
Greenpeace described the outcome of the latest auction 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.
Richard Sandford, the co-chair of the Offshore Wind Industry Council, said lessons must be learned so future auctions could bring forward new offshore wind farms. "It's clear that this year's auction represents a missed opportunity to strengthen Britain's energy security and provide low-cost power for consumers," he said.
"Our plans to accelerate the growth of this innovative sector in the years ahead remain ambitious and undimmed. We will continue to work with ministers to build up a world-class domestic offshore wind supply chain around the UK, creating tens of thousands of jobs and attracting billions in private investment, as well as providing further opportunities to export our products and expertise globally."
Conclusively, while solar and onshore wind projects did make gains in the auction—totalling almost 1.5GW—and tidal power projects secured a record-breaking 50MW, the absence of offshore wind energy casts a large, uncertain shadow over the UK's renewable future.