In the UK’s recent round of contracts to improve new projects for cleaner and safer energy, the UK’s government failed to attract the intended number of investors to reach this net zero target.
Firstly, there are no offshore wind projects that won a single contract in the annual auction this year to gain subsidies as the government were not offering enough money to support the challenge of rising issues that are currently occurring. This is a significant issue for the plans set out by the government to increase offshore wind capacity to 50 gigawatts by 2030 (J.Pickard, 2023. FT). This goal was implemented to ensure the government reach the overall target of zero emissions by latest 2050.
Ed Miliband (Labour’s Shadow Climate Secretary) stated that the results suggest the UK especially are currently in an ‘energy security disaster’.
Renewable energy projects in the UK are always helped by ‘contracts for difference systems’. These are where the government agrees to guarantee a set price for the electricity, they sell in any of the developing projects. However, developers insinuated that the maximum price on offer in this year’s round for those contracts was nowhere near what they were asking for to get any offshore wind projects to start. This is largely because of costs in labour and turbines have risen along with interest rates shooting up.
The investment for these projects were essential because many companies like the offshore Norfolk wind farm has seen prices in raw materials sore too. Steel, an essential part of wind farms, has had an 180% rise in costs since pre-pandemic levels, while iron and copper rose by around 50% in 2021 and has only continued to increase (Akselos, 2022).
Offshore wind has been a constant catalyst for Britain and their economy as it is the second largest offshore wind market (behind China), supplying roughly 11% of the UK’s electricity in 2021 (R.Millard, 2023. FT).
In a recent news briefing the government insisted that the contracts awarded in the auction for solar and onshore wind projects were successful. This is because they secured 95 contracts, their best so far. This positive though was merely the full truth of it because RenewableUK highlighted the fact that the 3.7GW of total capacity was the lowest ever since 2017.
Overall, it is clear the issues with funding this offshore wind project is evident and must be a focus point on the government’s next meetings to ensure that this 11% supply of the UK’s electricity isn’t lowered by an increase in a more expensive and un-eco-friendly alternative.
By Samuel Golder
Founder
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