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

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Taxpayer support created a world-leading sector. But subsidies didn’t rise this year to reflect soaring costs - and now nobody can afford to build a wind farm.

has made their plans unviable at the current levels of taxpayer support.

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 fuelledThe Irish government recently recognised the problem, setting a guaranteed price for the prospective wind farms’ output that was more than 20 per cent above Britain’s offer. Its CFD auction in May attracted bids for 3GW of new offshore wind capacity.

“At the end of the day, wind energy is far, far cheaper than anything else we’re getting and we need to be building more of it,” Alistair Phillips-Davies, CEO of major wind energy developer SSE, told the BBC. In the CFD auction, which runs from March to September, renewable energy developers submit sealed bids in which they propose a “strike price” – the lowest possible price at which they can viably produce the energy. The lowest bids, which must be below a government-determined cap, will get official approval.

“While there have been continued efforts from the renewables industry to drive down prices through innovation and efficiency measures, these developments have been unable to keep pace with an increasingly volatile economic environment.”

 

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