The UK government’s current Contracts for Difference (CfD) auction could secure as little as 2 GW of offshore wind, according to an analysis by New Energy and Climate Intelligence Unit (ECIU).
The non-profit organisation argues that UK bill payers will lose out as, due to inflexible Treasury rules, the government is seen to secure less cheap renewable energy. It says that in spite of inflation increasing offshore wind costs, the power generated by new offshore wind farms is expected to be much cheaper than the wholesale electricity price, which is set by gas power stations, and the cost of the gas is predicted to remain elevated for the foreseeable future.
ECIU estimates that the current auction will result in missed savings of over GBP 1.5 billion (USD 1.9bn/EUR 1.8bn) per year as it could have secured around 7 GW of offshore wind.
According to the organisation, the government ignores the fact that renewables are projected to save money, not inflate bills.
“Government seems to be focussed on North Sea gas licences and tax breaks for oil companies that won’t bring down bills while tying up offshore wind farms that generate electricity cheaper than gas in red tape,” Jess Ralston, energy analyst at the ECIU, adding that stifling wind farms drives up bills.
The analysis refers to the CfD maximum strike prices, which could have been changed to reflect the supply chain constraints that are making offshore wind construction more expensive. It recommends greater flexibility in the 2024 CfD round to reflect market realities and underpin the rate of growth necessary for meeting net-zero targets.
While the government increased the budget for established technologies in the current auction by GBP 20 million to GBP 190 million, ECIU says this will have little effect on the auction results, which are expected in early September.
(GBP 1 = USD 1.271/EUR 1.170)
Source: renewablesnow
