UK Raises Offshore Wind Strike Price to Spur Industry Growth
Posted 16/11/2023 13:31
After a lackluster response in the 2023 Contracts for Difference (CfD) auction round, the UK government has taken measures to bolster the offshore wind sector by increasing the maximum strike prices for offshore wind projects. The move follows crisis talks with the renewables industry and aims to address concerns over supply chain costs and potential delays in meeting the 2030 goal of hosting 50GW of offshore wind.
The Department for Energy Security and Net-Zero (DESNZ) conducted an extensive review and announced a 66% increase in the maximum strike price for offshore wind farms, reaching £73 per MWh. Floating offshore wind projects will also see a boost, with a 52% increase to £176 per MWh. These adjustments aim to provide clarity and confidence to the offshore wind sector, encouraging investment and supporting the industry's growth.
In addition to the price adjustments, offshore wind developers will now be compensated not only for delivering low-cost clean energy generation but also for contributing to broader socio-economic benefits. The inclusion of "non-price factors," effective from 2025, considers elements such as local job creation, supply chain investment, and the use of environmentally friendly manufacturing processes.
Other renewable technologies also received a lift in maximum bid prices. Geothermal projects are set to benefit from a 32% uplift, while solar projects will see an increase of 30%. The government's intervention aims to align contract prices with real-world inflation, addressing concerns raised by the industry.
The changes were welcomed by industry players, with Vattenfall describing them as a positive signal that the government understands the current market challenges. Observers note that these adjustments are crucial to restoring investor confidence in the UK's offshore wind market. The upcoming Autumn Statement by Chancellor Jeremy Hunt is anticipated to shed light on the government's broader commitment to supporting green industries and the transition to net-zero.