24th July 2018

Offshore wind capacity could double under new CfD auctions

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Up to two gigawatts of new offshore wind energy could be added every year in the 2020s after the UK government announced that Contract for Difference auctions will be held every two years from 2019.

Claire Perry, the energy minister, said that the new capacity would power millions of homes and support thousands of green jobs, while reducing the UK’s reliance on fossil fuels.

In recent years, Britain has established itself as a world leader in offshore wind, with more than seven gigawatts installed and operational. The latest announcement could lead to that capacity more than doubling by 2030, according to industry experts.

Ms Perry declared that “we are witnessing an unprecedented global transformation to a low-carbon economy”. She pointed out that an estimated 73 per cent of the $11.5 trillion expected to be invested in new energy projects globally by 2050 will go on wind and solar.

Under the Contracts for Difference, energy firms bid for contracts that guarantee a minimum price for the power they will sell. The process has forced firms to be transparent about the amount of support they need and has halved the cost of state support for offshore wind.

Announcing that the next auction will open in May, Ms Perry said: “We understand that to make meaningful long-term investments, industry needs clarity over years, not months. That is why we are also announcing the intention to run subsequent auctions around every two years after that, using the £557 million that we have already announced.

“Depending on the auction prices, this could see 1-2 gigawatts of new offshore wind every year in the 2020s, powering millions more homes a year, and we will look at ways to manage the auctions to ensure smooth delivery of low carbon generation. In return we expect the offshore wind sector to continue cutting costs and reducing household bills whilst growing UK manufacturing.”

She added: “For the last decade the Offshore wind industry has been a great British success story: increasing productivity, raising earnings and improving lives in communities across the UK. Today, the sector gets the certainty it needs to build on this success through the next decade.”