Offshore wind shortfall would cost households millions

Ministers have been warned that failing to meet offshore wind targets risks adding an extra £530 million a year onto household energy bills.

Energy UK analysis reveals the upcoming Contracts for Difference (CfD) auctions will fail to deliver the expansion of offshore wind needed for the UK to hit its renewable energy targets.

Consequently the trade association has called for government intervention to attract more investment in the sector.

In particular, Energy UK warns that the forthcoming auctions will “fall well short” of the UK’s target to generate 50GW of offshore wind by 2030, unless the government intervenes.

Without government intervention, Energy UK claims that an extra £530 million will be added onto annual household bills to cover the costs of importing more expensive gas.

It will also lead to an extra six million tonnes of carbon emissions per year, according to the trade body.

Energy UK deputy director Adam Berman said: “Meeting the government’s clean energy ambitions requires a relentless focus on delivery. The introduction of annual auctions was a welcome and necessary step to accelerate the rollout of offshore wind – but that will prove futile if the auctions themselves are underpowered.

“Developers are facing challenging investment conditions, but the government simply hasn’t gone far enough in recognising the effect of higher costs in the forthcoming round.

“The stark reality is that without rapid government intervention, the UK is set to fall short of our clean energy targets. As the 2030 target moves further and further into the distance it will lead to increased costs and emissions, and risk the UK falling behind in an increasingly competitive international market.”

In the short-term, the trade association is calling on the government to revise the budget for the next CfD auction to make it more attractive to international developers.

Berman added: “We have been a leader in offshore wind, but underdelivering on the Contracts for Difference programme will jeopardise the UK’s ability to maintain and expand our position as a clean energy superpower.

“We can’t afford to lose out on homegrown energy projects that will bring down bills, lower emissions, and bolster our energy security.”

At present there is around 27GW in operation or in receipt of a CfD contract. That means the three forthcoming auctions will need to deliver another 23GW; working out at a record 8GW each round.

However, the forthcoming (AR5) auction is forecast to bring forward just 3.2GW of new capacity – 4.8GW short of the necessary amount and meaning the next round will have even further to catch up.

A Department for Energy Security and Net Zero spokesperson said: “We have set ourselves ambitious targets and we are confident we’ll achieve them. We are world-leaders in renewable technologies, being home to the four largest operational offshore wind farms in the world, and the costs of these technologies have been coming down over time.

“Our plans to power up Britain, combined with the annual auction process now in place, also gives the industry more confidence to invest.”