After the UK’s biggest renewable energy auction, the government said on Thursday that the contract price for wind farms was almost 6% lower than the previous auction, despite the rising cost of materials to build wind farms. A series of new contracts is expected to add about 7 gigawatts of net power to Britain’s wind fleet by 2026. The government hopes to have 50 GW by 2030 and has launched a push to expand Britain’s renewables industry in the face of soaring prices fossil fuels. Russia’s invasion of Ukraine has exacerbated an already volatile oil and gas market and left countries scrambling to bolster their energy supplies. UK ministers have been forced to ask coal-fired power stations to keep running through the winter amid fears of blackouts caused by power shortages. However, renewable energy, including wind power, is seen as central to Britain’s goal of net zero carbon by 2050. Offshore wind farm operators will sell power for just £37.35 per megawatt hour, 5.8% below the lowest bid in the most recent 2019 auction. “Contracts for difference” guarantee wind companies fixed prices for selling electricity for the next 15 years. If the market price falls below the contract price, the government subsidizes the difference. If the market is higher, the companies return money to the government. Since wholesale energy prices started to soar last year, wind farms have started paying the government back. The easing of an effective moratorium on new onshore wind farms – imposed in 2015 – meant that onshore wind and solar were both included in an auction for the first time in seven years. Onshore wind power is now around 45% of the price secured in the 2015 auction. Among the winners from the auction were Danish power company Ørsted, Scottish Power and Sweden’s Vattenfall. Ørsted has landed the contract for the world’s largest offshore wind project, Hornsea Three, 100 miles (160 km) off the east coast of Yorkshire. It is hoped the project will generate enough renewable electricity to power 3.2 million UK homes. Scottish Power has secured a contract for the East Anglia Three offshore wind project, five onshore wind projects and 10 solar sites. Vattenfall has agreed terms for the Norfolk Boreas offshore wind farm, which it said would power around 1.5 million homes. It is hoped the works will help eventually reduce bills for consumers, which are expected to top £2,800 from October. Business Secretary Kwasi Kwarteng said: “Sky gas prices are hitting consumers across Europe. The more cheap, clean energy we produce within our borders, the better protected we will be from volatile gas prices that drive up bills.” Separately on Thursday, National Grid unveiled the biggest investment plan in the UK’s electricity grid since the 1960s. The £54 billion upgrade will coordinate grid connections for offshore wind farms for the first time. National Grid’s electricity arm has proposed 15 connection points to bring 18 offshore wind farms onshore. Most offshore wind projects have their own grid connection. National Grid hopes to cut costs and limit disruption for coastal residents by reducing the number of cables and pylons needed. Subscribe to First Edition, our free daily newsletter – every morning at 7am. BST Scottish Power chief executive Keith Anderson has urged the government to speed up the work of getting renewable energy projects approved and connected to the grid. “There is huge public support for the goal of net zero. There is a need for speed. The planning system itself is fine, but it’s about getting the process faster,” he said. Gareth Miller, managing director of consultancy Cornwall Insight, said: “As consumer bills rise to unprecedented levels, these results show the value that renewable energy can play in reducing the cost of electricity generation, decoupling electricity bills from natural gas prices and an environment currently where high natural gas prices set the price of electricity in the market. This week, the Queen’s estate manager, the Crown Estate, identified five areas on the coast of Cornwall and Pembrokeshire that could host floating wind farms.
