The government has increased the maximum price for offshore wind projects by 66% for next year’s Contracts for Difference Round.
A contract for difference is a financial contract that pays the differences in the settlement prices between the opening and closing of trade.
To ensure offshore wind contracts are performing correctly the government has raised the stake prices from £44/MWh to £73/MWh for offshore wind, and from £116/MWh to £176/MWh (representing a 52% increase) for floating offshore.
Energy secretary Claire Coutinho said “This is a vital part of our plan to have enough home grown clean energy, bringing bills down for families and strengthening our energy independence.”
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Energy security minister Graham Stuart added: “This critical update to the scheme’s design provides further clarity and confidence to the offshore wind sector and ensures the scheme remains competitive for renewable developers investing in low carbon technologies.”
The government also announced that offshore wind giant Seaway 7 has received a £370 million loan guarantee from the UK’s export credit agency (UKEF) to help it build more sites and expand its current fleet.
The move comes after utility bosses called on the government to do more to support the renewable energy industry by offering higher subsidies for offshore windfarms to reflect the higher costs of building them.
Greenpeace UK policy director Doug Parr commented: “This is a shrewd decision, and the only way to resurrect the UK’s struggling offshore wind industry,” commented Greenpeace UK policy director Doug Parr.
He went on to describe the most recent auction as “a complete and utter failure for the technology”.
“Enticing developers back to the UK with higher and fairer prices could reverse this damage. Even with this new ceiling price, offshore wind will remain vastly cheaper than gas,” he continued.
He added: “And, since the cost-of-living crisis is largely a cost-of-gas crisis, getting more offshore wind built is a genuine way to lower bills as well as to slash emissions”.
