THE VIEW | Offshore wind bidders balk – leaving UK green plans all at sea

September 8, 2023
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3 min read
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Repeated industry warnings that extraordinary cost and supply chain pressures made targeted strike prices for latest auction unachievable went unheeded  – and the result is that Britain's ambition to have 50GW of sea-based plant online by 2030 looks further away than ever, writes Victoria Maguire Toft

Friday saw the results of the latest renewable energy auction in the UK, the AR5 (allocation round 5), released, revealing a grand total of zero bids for offshore wind, leaving Westminster’s ambition of seeing 50GW of turbines turning by 2030 looking further away than ever. 

Tot-up the 15GW now in operation in British waters, the 8GW under construction, and the 6.5GW have secured a route to market via the country’s Contracts for Difference (CfD) model – including Vattenfall’s 1.8GW Norfolk Boreas, shelved last month as uneconomic in the current market situation – and a 20GW gap is laid bare – with only six years to fill it.​ 

Past allocation rounds via the country’s CfD model have seen continuously lower strike prices and higher volumes awarded. From 1.2GW at £114-120/MWh ($142-150/MWh) in 2014 to 7GW at £37/MWh in 2022. The latter included the country’s first CfD support for floating wind, with 32MW awarded at £87/MWh. 

The Conservative-led government can hardly claim to have been taken by surprise. For months developers have been sending up warning flares that the extraordinary macroeconomic pressures and supply chain woes facing the sector as it attempts to ramp up deployment to meet hyper-ambitious national goals were reaching a tipping point.  

But ever ardent denialists must see the auction results – which, it should be noted, also saw no interest from floating wind projects, further undermining the UK’s 5GW 2030 objective – are a clear indicator that the offshore wind policy framework is out-of-tune with the hard realities on the industrial frontline. 

Several observers saw the zombie offshore wind auction as a revelatory move by developers in light of recent financial write-downs and ‘paused’ projects. ​But could the failure to ignite interest compound the expected supply chain shortages foreseen until at least the end of the decade, as awards are delayed, and targets remain fixed? 

Time will tell whether the UK government circles back with a ‘Round 5.5’ that offers a higher price cap – or if developers will have to wait for Round 6.  

Do you want to keep up to date on the many offshore wind auctions coming around the world – what will the volumes be and when are the auctions starting? Aegir Insights recently released our auction intelligence package for subscribers, including updated auction database and timeline. Reach out to us to learn more about our intelligence offerings. 


This article was first published in Aegir Insights' intelligence newsletter, Beaufort.

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Tagged: Beaufort · UK
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