Government offshore wind auction a 'monumental failure' - and it could mean a billion-pound energy bill bombshell

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Advocates warn the auction could potentially be the biggest disaster for clean energy in almost a decade

A key government clean energy auction has yielded no bids for new offshore wind farms, which climate campaigners fear could deal a serious blow to the UK's plans to decarbonise electricity production.

In the annual auction - which lets companies bid to supply the grid with electricity - new solar, onshore wind, geothermal and tidal energy projects managed to secure contracts. However, the government has announced no new offshore wind contracts, seen as the backbone of the UK’s green electricity ambitions, were included this year.

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This could put a serious dent in MP's promise to deliver 50 gigawatts (GW) of offshore wind by 2030, up from 14 GW today, while independent research non-profit the Energy and Climate Intelligence Unit estimates it could also cost the UK's collective billpayers a billion pounds each year.

Energy and Climate Change Minister Graham Stuart said they were still "delighted" to have secured a record number of successful projects across solar, onshore wind, tidal power and geothermal.

No new offshore wind projects secured bids in the government's big clean energy auction (NationalWorld/Adobe Stock)No new offshore wind projects secured bids in the government's big clean energy auction (NationalWorld/Adobe Stock)
No new offshore wind projects secured bids in the government's big clean energy auction (NationalWorld/Adobe Stock) | NationalWorld/Adobe Stock

"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," he said. "The UK installed 300 new turbines last year and we will work with industry to make sure we retain our global leadership in this vital technology."

Labour's Shadow Energy and Net Zero Secretary, Ed Miliband, said the fact that no offshore wind projects were successful in the government's latest auction was "an energy securing disaster", and could mean a £1 billion bombshell for families' energy bills.

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"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," he continued.

“This is just the latest episode in the Tories' 13 years of failed energy policy - they broke the onshore wind market, they undermined the solar industry, and they caused chaos with botched home insulation. Every family and business are paying the price for these failures in higher energy bills, and our country remains exposed."

The industry had been warning for many months that the government was setting the auction limit price - or the Administrative Strike Price - too low to unlock investment in new renewable energy projects, particularly in light of massive inflation to the supply chain costs of renewables, Labour said in a statement, but it seemed the government had not listened

Miliband added: “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."

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Greenpeace UK’s policy director, Doug Parr, said this was a "monumental failure", and potentially the biggest disaster for clean energy in almost a decade. "Thanks to cost pressures and inept government policy, this auction round has completely flopped - denying bill payers access to cheap, clean energy and putting the UK’s legally binding target of decarbonising power by 2035 in greater jeopardy."

Mr Parr said this would leave the UK more dependent on expensive, imported fossil gas. “Offshore wind is one of the cheapest and cleanest forms of power there is, but in an effort to save consumers pennies on their energy bills, the government is costing them pounds.

"We need urgent reforms to the way these contracts are awarded and smart changes in government policy to unlock private investment and remove planning bottlenecks," he warned. "If they don’t, the new renewables - which are essential for lowering bills, increasing energy security and slashing emissions - simply won’t get built.”

Meanwhile Mike Childs, Friends of the Earth’s head of policy, said the failed offshore wind auction was highly predictable. "The government has missed yet another open goal that would have boosted energy security and made household bills more affordable.

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“Since energy bills shot up last year, ministers have refused to invest in home insulation, despite our housing stock being amongst the worst in Europe and failed to unleash the full potential of our vast onshore wind resources," he said.

“Now it’s botched an auction that should have led to a boom in offshore wind with all the economic benefits this would bring. The new Secretary of State, Clare Coutinho needs to get a grip on her failing department - and quickly.”

While offshore and floating offshore wind do not feature in this year’s allocation, the government maintained that the clean energy sector was "a British success story". The lack of interest in offshore wind projects was in line with similar results in countries including Germany and Spain, as a result of the global rise in inflation and the impact on supply chains which presented challenges for projects participating in this round, they said in a statement.

Some of the 95 projects that did receive funding included several new solar projects, 11 tidal stream energy projects, three brand new geothermal energy projects - for the first time in the scheme's history - and 24 onshore wind projects.

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This comes just days after the government overturned a de facto ban on onshore wind farms amid mounting pressure from a group of Tory MPs. In a ministerial statement with immediate effect, the government relaxed planning permissions.

Communities backing local wind farms could also benefit from cheaper energy under proposals to incentivise more projects, with the government to set out the next steps for this in autumn.

Before the change, a single objection would be enough to effectively veto a proposed onshore wind farm project.

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