Industry has urged the UK government to reconsider the budget made available to offshore wind projects in the AR7 Contracts for Difference auction.
It follows today’s earlier announcement that London will allocate £1.08bn across fixed-bottom and floating technologies.
Trade association RenewableUK warned that the figure “will not maximise investment” into new projects and is likely to cover only about a quarter of the 20GW of eligible capacity for this year’s tender.
Energy department DESNZ has confirmed £900m will be made available to fixed-bottom wind projects, with a further £180m for floating schemes ahead of a bidding window next month.
RUK executive director of policy and engagement Ana Musat said: “Given the amount of competition in this year’s auction, we expect to see competitively-priced bids, so the government should adjust the budget to maximise procurement, which could attract up to £53bn in private investment in the UK economy.
“It’s important that this allocation round supports further development of floating wind technology. Early investment in these demonstration-scale projects will help build up supply chains and bring down costs to enable us to scale up in the next decade.
“Every gigawatt of new offshore wind capacity we install boosts our economy by £2-3bn, and with the right level of support we can more than double the number of offshore wind jobs from 40,000 now to 95,000 by 2030.
“This would strengthen our energy security, drive economic growth and reduce our exposure to volatile gas prices.”
The trade group added an “ambitious pipeline” of renewable energy projects is “crucial for triggering large-scale private investment” in offshore wind supply chains and manufacturing.
Scottish Renewables chief executive Claire Mack also urged the government to “carefully consider” the budget to reassure investors of its commitment to wind farms off Scotland.
“This year’s auction is a pivotal moment to inject fresh momentum into Scotland’s offshore wind sector and build on the strategic investments made in our supply chain to date,” Mack said.
“An auction that fails to deliver for Scotland will seriously undermine our ability to maintain and secure the growth that is essential for energy security.
“A record amount of capacity is eligible for AR7 and this fierce competition will ensure new capacity is secured at the best possible value to consumers, despite increasing global cost pressures.
“The budget announced today would significantly restrict that value from reaching consumers and communities. We urge careful consideration to ensure the final budget best delivers on our long-term national interests.
“Given no contracts have been awarded to new fixed-bottom projects in Scotland since 2022, the industry needs to be reassured that the UK government remains committed to continued deployment of Scottish fixed and floating offshore wind projects.
“This will be critical for driving economic prosperity across all corners of the country, including the North East of Scotland.”
The UK government’s head of Clean Power 2030 Chris Stark said bids for fixed-bottom wind farms will “by design” likely exceed the budget limit, noting London’s new ability in this year’s auction to contract more offshore wind generation later in the process by adjusting the budget if it sees value for money.
“For the first time, we will be able to ‘see’ the bid stack (but not the bidders) beyond the agreed budget and make informed decisions to contract for more offshore wind capacity at a price that offers real value to consumers,” Stark stated.
Energy UK’s director of policy and advocacy Adam Berman said the AR7 budget is a “step in the right direction” towards a secure UK energy system with offshore wind as the backbone of the UK’s renewables capacity.
“It’s right that the government is focused on procuring renewables projects that represent best value for money,” Berman added. “This is only the start of the auction process, and expanding the budget remains a possibility if it can represent strong value to consumers and the broader economy.
“Today’s budget announcement will provide investors with the confidence needed to continue investing millions of pounds every day to secure our country’s energy future.
“It’s critical that the government continues to work closely with the sector to maintain ambition for the upcoming auction rounds for offshore wind and other technologies.”