Frugal government deals a blow to UK’s offshore wind industry

afr.com:

London | Britain’s world-leading offshore wind industry has suffered a major blow, after the government set its subsidy rate too low in the latest auction for licences – and failed to attract a single bidder.

Industry experts said the government’s policy blunder would potentially delay up to 5 gigawatts of wind energy coming online, lumbering consumers with up to £1 billion ($1.96 billion) in higher bills in coming years.

Britain accounts for about a quarter of the world’s offshore wind generation capacity. Reuters

“The auction is likely to be a major blow to the government’s renewables plans and makes meeting 2030 offshore wind targets more challenging,” said Alex Asher, a senior consultant at energy analysts Cornwall Insight.

It comes as several large offshore wind developers in Britain put their already-subsidised projects on ice, or threaten to. They say the surge in the cost of building wind farms has made their plans unviable at the current levels of taxpayer support.

The failure of Britain’s 2023 “contracts for difference” (CFD) auction will send a warning worldwide that higher subsidies are needed to keep up the momentum of offshore wind development.

The slowdown is already jeopardising Britain’s ambition to reach 50 GW of offshore wind capacity by 2030, up from 13.7 GW in 2022.

Britain’s present capacity accounts for about a quarter of the world’s total, and seven of the world’s 10 largest wind farms are in UK waters. This was largely achieved through four previous CFD auctions in the past decade.

The subsidies are needed because wind farms always face steep upfront capital expenses. This has been exacerbated since COVID-19 and the Ukraine war, as developers grapple with tight supply chains that have fuelled