Britain ramps up subsidies for struggling offshore wind industry

afr.com:

London | The British government has jacked up its subsidy for offshore wind developers by two-thirds, as it tries to revive a sector that has stalled in the face of soaring costs.

The government said its next auction for state “contracts for difference”, due in March 2024, will set a maximum price 66 per cent higher than the failed auction this year, in which not a single developer put their hand up to build more wind farms.

The move in Britain, one of the world’s foremost builders of offshore wind energy, will be noticed in Australia: the industry is only just emerging Down Under, at a time when skills shortages, rising interest rates and high raw materials prices have driven up costs.

Offshore wind turbines at the Scroby Sands Wind Farm near Great Yarmouth. Bloomberg

Tim Dixon, a senior consultant at energy analysts Cornwall Insight, hailed the announcement as “a much-needed shift in policy that acknowledges the harsh realities developers face in today’s challenging economic landscape”.

For the 2024 CfD auction, the government has boosted the maximum wholesale electricity price at which developers can still get taxpayer subsidies: it will rise from £44 ($84) per megawatt hour in the failed auction this year to £73 per MWh. This is an index-linked 2012 price, so the present value of the subsidy is closer to £100 per MWh.

For floating offshore wind projects, which have higher capital investment costs, the strike price has been lifted 52 per cent to £176 per MWh. The strike prices for solar, geothermal and tidal energy projects were raised by one-third.

Vestas Wind Systems CEO Henrik Anderson told the Financial Times that this was an “important first step towards restoring investor confidence and getting projects back on