UK Offshore wind target could be blown off course
has warned that the forthcoming Contracts for Difference (CfD) auction
will fall well short of delivering the expansion of offshore wind needed
to hit the Government’s 2030 50GW target.
The CfD scheme has played a vital role in the UK’s world-leading expansion
of clean energy, in particular offshore wind, driving down costs for customers
while providing necessary certainty for investors in these long-term projects.
The Government has set a target for 50GW of offshore wind capacity by 2030
– at present there is around 27GW in operation or in receipt of a CfD
contract. As future offshore wind developments will almost exclusively
come through the scheme, that means forthcoming auctions will need to deliver
However, Energy UK analysis, published today, shows that, as it stands,
the scheme will fall well short of achieving this. The long lead-in times
for such projects means the extra capacity will need to come from the next
three annual auctions, working out at a record 8GW each round. Yet the
forthcoming (AR5) auction will, at best, bring forward 3.2GW of new capacity
– 4.8GW short of the necessary amount and meaning the next round will
have even further to catch up.
In fact, the rising costs and other challenges facing developers of clean
energy projects, highlighted by Energy UK and others over recent months,
means it is likely the auction will actually bring forward even less capacity
than the maximum possible.
The potential shortfall of (at least) 4.8GW would be enough to power 5.5
million homes annually and could cost customers an extra £530m a year by
2030, due to the additional need for more expensive imported gas, which
would also lead to an extra 6 million tonnes of carbon emissions.
Energy UK’s Deputy Director, Adam Berman, said:
“Meeting the Government’s clean energy ambitions requires a relentless
focus on delivery. The introduction of annual auctions was a welcome and
necessary step to accelerate the rollout of offshore wind – but that will
prove futile if the auctions themselves are underpowered.
“Developers are facing challenging investment conditions, but the Government
simply hasn’t gone far enough in recognising the effect of higher costs
in the forthcoming round.
“The stark reality is that without rapid Government intervention, the
UK is set to fall short of our clean energy targets. As the 2030 target
moves further and further into the distance it will lead to increased costs
and emissions, and risk the UK falling behind in an increasingly competitive
“We’re calling on the Government to revisit the AR5 budget, and to take
urgent action to ensure the UK continues to attract crucial international
investment. We have been a leader in offshore wind, but underdelivering
on the Contracts for Difference programme will jeopardize the UK’s ability
to maintain and expand our position as a clean energy superpower. We can’t
afford to lose out on homegrown energy projects that will bring down bills,
lower emissions, and bolster our energy security.