Britain will increase the guaranteed price offered for offshore wind projects in its next renewables auction by 66%, the government said on Thursday, as it seeks to spur more projects after its last auction failed to attract any offshore wind investment.
Britain, which is already the world’s second largest offshore wind market after China, is seeking to ramp up its capacity to 50 gigawatts (GW) by 2030 from around 14 GW now, to help meet its climate targets and boost energy security.
“We recognise that there have been global challenges in this sector and our new annual auction allows us to reflect this,” Energy Security Secretary Claire Coutinho said in a statement.
“This is a vital part of our plan to have enough homegrown clean energy, bringing bills down for families and strengthening our energy independence,” she said.
The offshore wind sector has been hit by surging supply chain and interest rate costs over the past year with some developers cancelling projects, while Britain’s last auction yielded no offshore wind projects when the results were announced in September with developer saying the price offered was too low.
The government said despite the absence of offshore wind, the last auction had succeeded in supporting other technologies such as solar, tidal and onshore wind projects capable of generating 3.7 GW, the equivalent to powering some 2 million homes.
Britain’s contract-for-difference (CfD) scheme, offers renewable power developers a guaranteed price for their electricity.
Offshore wind projects will be offered a strike price of 73 pounds ($90.61) per megawatt hour (MWh) up from the 44 pounds per MWh offered in the September auction while floating wind projects, whose technology is at an earlier stage of development, will be offered 176 pounds per MWh up from 116 pounds in the previous auction.
The government said the auction would open in March next year.
Project developers welcomed the changes and said they await more details on the auction.
“The real test of that ambition will come when the overall budget for the next auction round is set next year. But, no doubt about it, this is a step in the right direction,” Keith Anderson, CEO of Iberdrola’s ScottishPower said in an emailed statement.
(Reporting By Susanna Twidale; Editing by Marguerita Choy)