Experts say Ed Miliband’s £1.1bn for new offshore wind projects not enough | Wind power

Energy Secretary Ed Miliband has set aside £1.1 billion a year for offshore wind developers to invest in new projects in a funding round seen by some in the sector as too modest to meet the UK’s green electricity targets.

The government’s Department of Energy today announced it has budgeted £900 million to pay developers of fixed offshore wind turbines and £180 million for floating platforms.

Some energy sector experts questioned whether the budget would allow enough generation to keep the UK on track to decarbonise electricity generation by 2030. One said they expected a budget of up to £2 billion to meet the target.

RenewableUK, an industry lobby group, said the budget would only cover around a quarter of the 20 gigawatts of projects with planning permission that would be eligible. The group’s executive director of policy, Ana Musat, said: “The budget announced today will not maximize investment in new offshore wind farms. »

Renewables will provide around half of the UK’s electricity in 2024, with wind accounting for 30% of generation for the first time, overtaking gas-fired power stations. Huge further investment in wind and solar would be needed to meet the target of completely removing carbon emissions from UK electricity supplies by 2030.

Government sources have previously said ministers could consider abandoning the 2030 target – long seen as extremely ambitious by experts – if it were to add too much to household bills. The Labor government’s clean electricity target faces opposition from the Conservative Party and Reform Party, who say they would abandon net zero emissions policies.

A government source disputed that the 2030 target was being called into question, saying the initial budget for offshore wind showed “significant support from the Treasury”.

Wind developers, expected to include energy companies SSE, RWE and ScottishPower, will be invited to bid to build offshore wind projects, which would be eligible to receive the new funds.

Unlike in previous years, the final budget could increase if ministers consider that enough projects offer good value for money – potentially surpassing the £1.1 billion allocated to offshore wind last year. The contracts would also last 20 years, instead of 15, in an attempt to attract lower prices.

Chris Stark, the civil servant leading the UK’s clean energy efforts under Miliband, said he expected the bids to exceed funding allocated for fixed offshore wind power. The government is prepared to “outsource more offshore wind generation if we see value for money for the consumer,” he said in a social media post.

Michael Shanks, Minister of State for Energy, said: “This auction is another step towards delivering the clean energy this country needs to end our dependence on volatile global gas prices, ensure our energy security and lower our bills for good.

“Our new competitive auction process will allow us to buy the right amount of clean energy at the right price on behalf of the British people, so we can take back control of our energy.”

The budget allocated by the government may not be fully spent, but rather represents the ‘worst case’ cost under the ‘contracts for difference’ (CfD) system, which reduces the risk for developers to invest in clean energy production.

Under this program, the government sets a bar for electricity prices generated by projects. If prices fall below this mark, called the strike price, the government makes up the difference, while producers must reimburse the government for any profits above this price. The entire budget would only be spent if energy prices remained lower than forecast for an extended period.

Jess Ralston, head of energy at the Energy and Climate Intelligence Unit think tank, said: “Every bit of free wind and solar power we exploit means we have to buy less foreign gas from abroad, boosting our energy security. »