Key events
ScottishPower: It’s a multi-billion pound lost opportunity
ScottishPower, which operates several offshore wind projects off the UK coast, has revealed it did not submit any bids to the contract-for-difference (CfD) support scheme.
Keith Anderson, ScottishPower CEO, says today’s auction results is “a multi-billion pound lost opportunity” to deliver low-cost energy for consumers, and also “a wake-up call for Government”.
Anderson adds:
“The CfD process is recognised globally as a lynchpin of the UK’s offshore success, but it also needs to flex to keep pace with the world around it.
We all want the same thing – to get more secure, low-cost green offshore wind built in our waters. ScottishPower is in the business of building windfarms and our track record is second to none in terms of getting projects over the line when others haven’t been able to. But the economics simply did not stand up this time around.
“We need to get back on track and consider how we unlock the billions of investment in what is still one of the cheapest ways to generate power and meet the UK’s long-term offshore wind ambitions for the future.”
Ed Miliband is now telling Radio 4’s Today Programme that today’s news is an “absolute disaster for Britain”, and an “absolute condemnation of the government’s energy policy”.
He adds:
They are trashing the crown jewels of our energy system, and it was all totally avoidable.
Miliband explains that failing to increase the guaranteed price for offshore wind projects, to recognise increased costs, was a “totally self-defeating false economy”; it will mean the UK uses more imported gas instead.
Labour: this is an energy security disaster
The Labour party say the news that no offshore wind projects were successful in the Government’s latest auction for renewables support is an “energy security disaster”.
Ed Miliband MP, Labour’s Shadow Energy Security and Net Zero Secretary, says ministers failed to heed warnings that the guaranteed price offered for electricity by the government was too low.
“The news this morning is an energy security disaster and a £1 billion Tory bombshell that will push bills up for hardworking families. 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.
“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.
“Only Labour can get Britain building and deliver the clean energy we need to cut bills and make the UK energy secure, with our plan for clean power by 2030.”
Goverment: record number of renewables projects supported
Despite today’s failure to award support to any offshore wind projects, the government says a “record number of renewables projects” have been awarded Government funding today.
The Department for Energy Security and Net Zero says 95 new projects have been awarded funding from its renewables scheme.
They will deliver 3.7GW of clean homegrown energy, enough to power the equivalent of two million homes.
That include onshore wind, solar, and tidal, they say, “helping to grow the economy and increase UK energy security”.
Energy and Climate Change Minister Graham Stuart said:
“We are delighted that our first annual Contracts for Difference auction has seen a record number of successful projects across solar, onshore wind, tidal power and, for the first time, geo-thermal.
But what about the failure to award any contracts to offshore wind?
Stuart says the government will ‘work with industry’, to hit its offshore wind goals:
“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.
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.
The Department for Energy Security and Net Zero says inflation, and supply chain problems, led to no contracts being awarded to offshore wind contracts this morning:
While offshore and floating offshore wind do not feature in this year’s allocation, this is 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.
Introduction: UK offshore wind auction flops
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Britain’s clean energy ambitions have been dealt a painful blow this morning, as a subsidy auction to support new renewable energy projects awarded no contracts for offshore wind projects.
Critics are calling the flop the biggest clean energy policy failure in almost a decade.
So what went wrong with the UK’s flagship renewables scheme? Industry insiders say ministers failed to heed warnings that they had set the auction prices too low, failing to adjust for the soaring costs faced by renewable energy developers when they build offshore wind.
The auction uses a mechanism known as contracts for difference, which guarantee consumers will pay a fixed price for the energy generated by the bidder. When wholesale prices are lower, subsidies added to customer bills top up the difference; when wholesale prices are higher, developers backpay the difference.
That fixed cost, though, appears to have been set too low to attract bids, meaning the government’s target of reaching 50GW of offshore wind by 2030 could be in jeopardy.
Contracts have been awarded for onshore wind, solar, geothermal and tidal stream projects, data released by the government shows.
But the failure to award offshore contracts will damage Rishi Sunak’s plans to meet climate targets and drive down energy bills, just as the prime minister flies to India for the G20 leaders summit.
My colleague Jillian Ambrose reports:
Nearly all the biggest offshore wind developers in the UK were forced to sit out of the bidding after ministers refused to increase the maximum price for the auction, despite a 40% increase in the cost of manufacturing and installing turbines due to inflation.
The government’s failure to secure more than one/two offshore wind farms was described by Greenpeace as “the biggest disaster for clean energy policy in the last eight years” because it risks jeopardising the UK’s plan to triple its offshore wind power capacity by 2030, and casts doubt on Britain’s climate targets.
Renewable energy developers submitted sealed bids in the auction in the first half of August; the most competitive proposals were then ranked, with contracts awarded to projects offering the lowest cost to energy-bill payers.
But there had already been warnings that firms would need to receive higher maximum prices, after rising costs forced Vattenfall to cease working on the multibillion-pound Norfolk Boreas windfarm.
We’ll have full reaction to the auction results shortly
The agenda
-
7am BST: German inflation report for August
-
1.30pm BST: Canadian employment report for August
-
5pm BST: Russian inflation report for August
