The UK’s Energy and Clean Growth Minister Claire Perry announced in the House of Commons on Tuesday that the UK government will set aside £60 million ($77 million) for the next clean energy contract auction due for spring of 2019 and that the government and the offshore wind industry are close to reaching a specific Sector Deal.
“It will include both £60 million for the Contract for Difference (CfD) auction next spring and a series of substantial commitments from the operators in the sectors to increase the UK content that will be spent,” Claire Perry said, speaking in the House of Commons on Tuesday. The announcement is almost certainly relevant only to the country’s offshore wind industry, as many experts believe the next CfD auction round will be an offshore wind-only affair.
The news, coming in the middle of the UK’s Offshore Wind Week, caught many by surprise and left many more angered at the lower-than-expected commitment. Specifically, it is a confusingly small amount compared to the total government support announced earlier this year for the coming few years. In July, the UK’s Department for Business, Energy, and Industrial Strategy announced that the next CfD auction would take place in May 2019, and every 2 years afterwards, with government support of up to £557 million.
A number of those within and without the UK offshore wind industry are suddenly questioning the government’s commitment to the industry, and wondering whether the government is trying to further drive down bid prices. Offshore Wind Consultants director John MacAskill is quoted as saying that the promised £60 million is “well short of expectations and to be honest on the lower end of what we wanted. If this is the level of support going forward as we head into an England and Wales Round 4 and the Scottish leasing processes, I question the UK ambition to get to 30 GW by 2030.”
“This could also damage the viability of more expensive, deeper Scottish projects, both leased and those to come out of the Scottish round if the CfD pot is either too small, or some kind of allocation is not applied,” MacAskill added. “We are not really impressed with this.”
“This is a genuinely bewildering move by the government that misses the opportunity to drive down offshore wind costs as fast as possible,” added Greenpeace UK’s Head of Energy, Kate Blagojevic. “They promised over half a billion pounds in investment, that was widely expected to be divvied up and made available in sizeable chunks over the next few years. But this first chunk is a pitiful sum that could end up limiting UK export potential and jeopardising our climate goals.
“If protecting the climate or boosting a rare UK industrial success story is the government’s priority, then they need to allocate the money that has been promised to accelerate development, bring down costs and cut emissions as quickly as possible. Perhaps the only way the government can make nuclear power remotely competitive is to deliberately sabotage offshore wind. This is an energy policy that flies in the face of climate science and public concern to reduce carbon emissions rapidly in the next few decades.”
Meanwhile, speaking on behalf of the Offshore Wind Industry Council (OWIC) — which has been working closely with the government on the offshore wind Sector Deal hinted at by Minister Perry — Co-Chair of the OWIC, Benj Sykes, who is also UK country manager for Ørsted’s offshore wind business, was more complimentary of what was coming down the pipeline.
“This is an important announcement by the Minister, taking forward new auctions to deliver on our ambition to meet a third of UK power by 2030,” Sykes said. “Industry and Government are close to agreement on a sector deal that will set the pathway to 30GW and we need to look at the details of how the next auction contributes to that goal.
“We welcome the Minister’s announcement that a transformative Sector Deal is imminent. Offshore wind is becoming an industrial powerhouse. As the Minster has made clear, it’s a key technology in our country’s transition to affordable clean power, and the backbone of a low-cost energy system in the years ahead.
“With the right deal in place, we can continue to attract billions of pounds of investment in new infrastructure, secure our power supplies, and create thousands of skilled jobs, including our supply chain which already extends to every part of the country.”
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