Ministers have confirmed that the next competitive auction for the procurement of new renewable power capacity will take place in May next year, with numerous projects including remote island and offshore wind competing for contracts for difference.
The Department for Business, Energy and Industrial Strategy announcement means that the country’s offshore wind capacity looks set to double over the next decade.
It comes after 2017’s successful contracts for difference auction that saw the cost of power from offshore wind farms drop by 50 per cent, meaning that it quickly became one of the cheapest options for new power, lower than both the cost of new gas and nuclear power.
The minister for clean growth and climate change Claire Perry also noted that further auctions will take place every two years, supported by a budget of £557 million.
Welcoming the news, Hugh McNeal – Chief Executive of RenewableUK – said that boosting the UK’s ambitions where offshore wind is concerned is a positive for members of the public, since this is one of the cheapest sources of new power in the country.
“Today’s announcement confirming the budget and timing of new auctions, sets us on the path do deliver the tens of billions of pounds of investment that will be needed to meet our ambition of at least 30 gigawatts by 2030. This is good news for domestic supply chain which can look forward to a pipeline of new offshore wind projects that will support tens of thousands of jobs across the UK.
“This is also an important boost for remote island wind, which like other renewables, is popular with the public and is a unique economic opportunity for island communities,” he went on to say.
Orsted, the biggest investor in offshore wind in the Humber, has also lauded the announcement, with Managing Director Matthew Wright saying how positive the move is for the UK’s offshore wind strategy.
The country has become an international leader in this area thanks to collaboration between industry and government, which has given companies the confidence to invest in projects, projects that have been delivered on time and on budget consistently, Mr Wright explained.
By making good use of contracts for difference, the offshore wind industry has cut costs dramatically, with projects like Hornsea Two recently winning an auction at the lowest price ever for such a job in the UK, cutting auction prices in half from two and a half years ago.
He added that the benefits of offshore wind are already being seen in regions like the Humber, which are close to the sea, with the sector bringing in new skilled job prospects, millions in community funding and lots of opportunities for local businesses.
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