Energy bill crisis: Missed offshore wind contracts

An estimated £1 billion in energy savings is at risk following a government oversight in contract allocation for offshore wind projects, experts have warned

Britons are facing the grim prospect of losing out on an estimated £1 billion in energy savings, all thanks to what experts are calling a “disastrous” government contract process for offshore wind farms.

Experts have explained that the critical issue arose when the Administrative Strike Price (ASP), which caps Contracts for Difference (CfD) auction bids, was not adjusted to reflect the project cost inflation for the AR5 CfD auction.

As a result of this oversight, none of the UK’s 5GW of ‘shovel-ready’ offshore wind projects bid into AR5, potentially leading to significant delays.

Had these projects been able to secure contracts, even with higher strike prices, they would have contributed to saving £1 billion per year in the mid-2020s, according to new analysis by the Energy and Climate Intelligence Unit (ECIU).

Jess Ralston, an Energy Analyst at ECIU, said: “By failing to back offshore wind, the government has added around £1 billion a year to energy bills in coming years. Combine this with the fudge on lifting the onshore wind ban and the government is going backwards on easing the energy bill crisis.

In response to the government’s announcement about the CfD results, Energy UK’s Deputy Chief Executive, Dhara Vyas said: “The absence of any new offshore wind projects confirms the industry’s worst fears that this auction round would fail to deliver and put the government’s own 2030 target in jeopardy.

“As that target shows, offshore wind should be making a huge contribution to ensuring cheaper, cleaner energy for our country and bolstering our energy security by reducing our reliance on costly fossil fuels. While the support for solar and onshore is welcome, it doesn’t compensate for the lack of offshore wind.”

Chris Hewett, Chief Executive of Solar Energy UK, acknowledged the success of solar projects in AR5 and emphasised the need to double the pace of solar installations to meet the government’s capacity target of 70GW by 2035.

Mr Hewett added: “The absence of contracts for offshore wind power is clearly an indication that AR5 was unbalanced, the result of inflationary pressures on the renewables industry falling much harder on that sector compared to solar.”

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