Windfarm developers have had to contend with surging cost inflation across their supply chains and, as a result, the government has agreed to raise the starting price at its next auction for offshore wind subsidies by around two-thirds to £73 per megawatt hour to help more offshore windfarm projects move ahead.
The government has also raised the starting price for floating offshore wind projects by more than 50% from £116 a MWh to £176 a MWh before the next subsidy auction in 2024.
While these moves will eventually feed through to household bills, they are necessary as offshore wind developers have been struggling to build new projects after costs in the sector soared.
Commenting Claire Coutinho, the energy security secretary, said: “We recognise that there have been global challenges in this sector and our new annual auction allows us to reflect this. This is a vital part of our plan to have enough homegrown clean energy, bringing bills down for families and strengthening our energy independence.”
Earlier this year the last clean energy auction saw none of the companies looking to build offshore windfarms take part – raising concerns about the future of the UK’s wind industry, which has a key role to play in the UK achieving its net zero goals.
Then the government started its failed auction at a price of £44 a MWh which the industry had warned was too low to make the projects economically viable.
Described as an energy security disaster the government was accused of failing to deliver on billions of pounds of investment and of forcing energy bills to be higher than otherwise would have been the case.
Hopefully, as the government claims, this move will bring greater clarity and confidence to the offshore wind sector which has such an important role to play in improving the UK’s energy security and as a generator of both growth and jobs.