It has been an eventful week for the offshore wind industry. A series of encouraging announcements were lined up for the official Offshore Wind Week, including new R&D investment and the creation of hundreds of new green jobs. Developers were given the nod that a crucial update on the next round of clean energy contract auctions would form the centre-piece of the week. Hopes were raised that a major new Sector Deal with the government was close to fruition. And then, on Tuesday afternoon in the House of Commons, Energy and Clean Growth Minister Claire Perry dropped something of a bombshell. The government may have assigned £557m for contract for difference (CfD) clean energy auctions through to 2025, but just £60m would be made available at next Spring’s auction. Perry positioned the announcement as welcome support for the industry and a precursor for the upcoming Sector Deal, which will include further plans to boost the UK’s offshore wind supply chain. But developers were left blind-sided by a lower than expected level of funding for the crucial next auction round. Greenpeace were swift to condemn the planned funding settlement as a “pitiful” sum that risked undermining the industry’s recent progress and jeopardising the UK’s carbon targets. “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,” said Greenpeace UK’s head of energy, Kate Blagojevic. “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.” Offshore wind industry insiders and analysts are more than a little conflicted on the government’s stance. On the one hand, confirmation of support levels and the clear timetable for on-going auctions should ensure significant levels of capacity are delivered. Moreover, one source said that having crunched the numbers the promised £60m of funding “looks less stingy than we first thought”. “Greenpeace jumped the gun a bit calling it ‘pitiful,” they added. “It is still less than we hoped, but it is closer to the 4GW of capacity level than we initially thought.” The government is gambling that offshore wind energy costs can keep on falling. But make no mistake, it is a gamble and if it backfires the UK’s energy decarbonisation plans could be left in serious trouble. The first indication of whether or not the government’s high stakes ploy has paid off will come next Spring. Until then the debate over whether the latest clean energy funding allocation is pitiful or prudent will rumble on.
Business Green 22nd Nov 2018 read more »