{"id":3498329,"date":"2023-09-13T14:18:23","date_gmt":"2023-09-13T14:18:23","guid":{"rendered":"https:\/\/www.resilience.org\/?p=3498329"},"modified":"2023-09-14T11:43:59","modified_gmt":"2023-09-14T11:43:59","slug":"uk-renewables-still-cheaper-than-gas-despite-auction-setback-for-offshore-wind","status":"publish","type":"post","link":"https:\/\/www.resilience.org\/stories\/2023-09-13\/uk-renewables-still-cheaper-than-gas-despite-auction-setback-for-offshore-wind\/","title":{"rendered":"UK renewables still cheaper than gas, despite auction setback for offshore wind"},"content":{"rendered":"

A UK government\u00a0auction<\/a>\u00a0has secured just 3.7 gigawatts (GW) of new renewable capacity \u2013 only a third of the total last year \u2013 and failed to contract any new offshore wind.<\/p>\n

The 95 projects winning \u201ccontracts for difference<\/a>\u201d (CfD) from the government are expected to generate around 9 terawatt hours (TWh) of electricity, less than 3% of current UK demand. This is 82% lower than last year\u2019s auction, Carbon Brief analysis shows.<\/p>\n

The \u201cextremely disappointing<\/a>\u201d result follows massive supply chain and inflationary pressures on wind and solar, estimated to have pushed the cost of offshore wind up by as much as 40% since last year.<\/p>\n

Yet wind and solar remain the cheapest way to generate electricity in the UK. This is because gas prices are around 100% higher than they were before the\u00a0global energy crisis<\/a>\u00a0and are expected to remain elevated for the foreseeable future.<\/p>\n

The result is being seen as a threat to the government\u2019s targets for 50GW of offshore wind capacity by 2030 and a fully decarbonised grid by 2035.<\/p>\n

These targets are key enablers of the UK\u2019s legally binding carbon budgets. If they are to be met, subsequent auctions will need to deliver much more capacity than was secured this year.<\/p>\n

Below, Carbon Brief explains the auction results \u2013 and looks at what happens next.<\/p>\n

Smallest auction return since 2015<\/h3>\n

The UK government has\u00a0committed<\/a>\u00a0to getting 95% of the country\u2019s electricity from low-carbon sources by 2030 and to\u00a0fully decarbonise<\/a>\u00a0the grid by 2035. It is also aiming for \u201cup to\u201d 50GW of offshore wind by 2030, including \u201cup to\u201d 5GW from\u00a0floating offshore<\/a>\u00a0schemes.<\/p>\n

The government\u00a0continues to describe<\/a>\u00a0offshore wind as \u201ccentral\u201d to meeting its targets and has previously been keen to\u00a0tout<\/a>\u00a0the UK\u2019s \u201cworld-leading\u201d status for the technology.<\/p>\n

In March, the government\u00a0released<\/a>\u00a0a glossy \u201coffshore wind net-zero investment roadmap\u201d, in which then-secretary of state Grant Shapps said: \u201c[W]e are cementing our position as amongst the most attractive places in the world for investing in offshore wind.\u201d<\/p>\n

Shapps\u00a0wrote<\/a>\u00a0of the need for a shift to low-carbon supplies in the face of the global energy crisis and Russia\u2019s war in Ukraine, to \u201cbreak[] with the fossil fuels that powered our last two centuries\u201d.<\/p>\n

Yet today\u2019s auction failed to secure any new offshore wind projects.<\/p>\n

One wind industry insider tells Carbon Brief: \u201cHow embarrassing to claim to be world leading and not have anyone bid into your auction.\u201d<\/p>\n

CfD auctions for new renewable capacity are the UK\u2019s primary route for achieving its targets in the electricity sector. Today\u2019s fifth auction (AR5) follows the first auction round in 2015, second in 2017, third in 2019 and fourth in 2022. Further rounds are due to be held annually.<\/p>\n

The latest round secured just 3.7GW of new capacity \u2013 chiefly\u00a0solar (1.9GW) and onshore wind (1.7GW)\u00a0\u2013 as shown in the figure below. As well as failing to secure any new offshore wind for the first time since the CfD auctions began, the round only contracted one third of last year\u2019s total.<\/p>\n

\"\"<\/p>\n

New capacity secured in each CfD auction round to date, megawatts, broken down by technology type. Source: Department for energy security and net-zero, Carbon Brief analysis. Chart by Simon Evans for Carbon Brief using\u00a0Datawrapper<\/a>.<\/em><\/p>\n

In addition to onshore wind and solar, the auction also secured a small amount of tidal projects (53 megawatts, MW) and, for the first time, geothermal (12MW).<\/p>\n

In its\u00a0press release<\/a>\u00a0marking the auction results, the government highlights that the number of projects contracted this year is larger than in any other round.<\/p>\n

Nevertheless, Carbon Brief analysis shows the winning bids are expected to generate just 9 terawatt hours (TWh) of electricity when built, equivalent to less than 3% of current UK demand.<\/p>\n

This makes the latest auction the smallest since 2015 in terms of the electricity it will generate, coming in some 82% lower than the 47TWh secured last year, as shown below.<\/p>\n

(In total, the projects contracted under all five auction rounds would generate 105TWh of electricity when they have all been built. This is roughly a third of current UK demand.)<\/p>\n

\"\"<\/p>\n

Electricity generation from renewable projects secured in each of the UK\u2019s five CfD auction rounds, terawatt hours, broken down by technology. Source: Department for energy security and net-zero, Carbon Brief analysis. Chart by Simon Evans for Carbon Brief using\u00a0Datawrapper<\/a>.<\/em><\/p>\n

Generating the same amount of electricity as secured in the latest auction using gas-fired power plants would require around 18TWh of the fuel.<\/p>\n

This is\u00a0equivalent<\/a>\u00a0to the amount of gas that would be produced by issuing new North Sea licences, which the opposition Labour Party has pledged to block if elected at the next election.<\/p>\n

Similarly, the 105TWh of electricity from all five auctions will displace about 210TWh of gas. This means UK net gas imports in 2030 would have been around 50% higher without the CfD scheme.<\/p>\n

If the latest auction had secured any new offshore wind, each 1GW of capacity would have generated around 5.5TWh of electricity, displacing 11TWh of gas demand.<\/p>\n

No new offshore wind<\/h3>\n

The lack of offshore wind in AR5 follows warnings from industry throughout 2023 that cost pressures would limit its ability to bid at the record low prices seen in recent years.<\/p>\n

Trade body\u00a0Energy UK<\/a>\u00a0noted earlier this year that inflation, interest rates increases, a supply chain crunch and regulatory uncertainty around grid connections and planning had all pushed up overall costs of offshore wind projects,<\/p>\n

The\u00a0government<\/a>\u00a0was aware of the pressures upon offshore wind costs and, in August, it increased the CfD budget by \u00a322m overall. The budget for established technologies including offshore wind as well as onshore wind and solar increased from \u00a3170m to \u00a3190m.<\/p>\n

But this did not go far enough, with\u00a0Energy UK<\/a>\u00a0noting that there were \u201csignificant concerns<\/a>\u201d that the auction parameters did not \u201crecognise the scale of cost increases seen over recent months\u201d.<\/p>\n

The administrative strike price (ASP) for offshore wind was set at\u00a0\u00a344\/MWh<\/a>, a small increase on the\u00a0\u00a337.35<\/a>\u00a0price which offshore wind cleared at last year. This is below current electricity prices, which across August were \u00a382.19\/MWh on average, according to\u00a0Nordpool<\/a>.<\/p>\n

According to the\u00a0Energy and Climate Intelligence Unit<\/a>\u00a0(ECIU) the cost of offshore wind has increased by as much as\u00a040%<\/a>\u00a0over the past year due largely to inflation.<\/p>\n

In terms of tonnes per MW, steel accounts for 90% of offshore wind, according to international trade association\u00a0Global Wind Energy Council<\/a>\u00a0(GWEC). Over 2020 and 2021, however, steel prices increased by 50%, according to a\u00a0report<\/a>\u00a0from the council.<\/p>\n

This further increased through 2022 due to the impact of the Russian invasion of Ukraine, in particular on\u00a0surging power prices<\/a>. For example,\u00a0British Steel<\/a>\u00a0lifted its prices by a \u201crecord 25%<\/a>\u201d in March 2022 due to rising electricity costs.<\/p>\n

The offshore wind industry also depends on copper for cabling and electrics. However, the price of copper increased by 60% over the two years from 2020, notes GWEC.<\/p>\n

Other core components have also increased in cost. Analysis by\u00a0Energy Monitor<\/a>\u00a0published in April suggests that the average cost of a 1MW wind turbine has increased 38% in two years. From $0.86m in 2020 to $1.18m in 2022.<\/p>\n

The most significant minerals used to make a wind turbine are copper, zinc, manganese, chromium, nickel, molybdenum and rare earths. These have all increased in price since 2020, with the price of molybdenum, in particular, surging by 285%, according to Energy Monitor.<\/p>\n

Overall, these\u00a0seven metals<\/a>\u00a0have increased in price by over 93%, the article notes.<\/p>\n

The impact of these rising prices has already been felt in the offshore industry, with Swedish energy group\u00a0Vattenfall<\/a>\u00a0announcing in\u00a0July<\/a>\u00a0that it was stopping the development of its Norfolk Boreas windfarm, which won a contract in last year\u2019s auction.<\/p>\n

The company said \u201chigher inflation and capital costs are affecting the entire energy sector, but the geopolitical situation has made offshore wind and its supply chain particularly vulnerable\u201d.<\/p>\n

Beyond cost increases, policy changes have also contributed to offshore wind challenges. The latest round was the first\u00a0two-pot auction<\/a>, with solar and onshore wind both directly in competition with offshore wind.<\/p>\n

The government also removed the \u201cmerchant nose<\/a>\u201d opportunity, which had allowed companies to delay triggering their CfD contract in order to benefit from high power prices.<\/p>\n

For example, the\u00a0Moray East<\/a>\u00a0offshore wind farm delayed the CfD contract it won in 2017, at a strike price of \u00a357.50\/MWh in 2022, to allow it to benefit from higher power prices seen at the time.<\/p>\n

The Department of Business, Energy and Industrial Strategy (BEIS) called on companies to act \u201cfairly<\/a>\u201d and subsequently consulted on the exclusion of the merchant nose opportunity.<\/p>\n

For AR5, there are set\u00a0parameters<\/a>\u00a0for determining when a project has begun operation and the CfD takes effect.<\/p>\n

During the\u00a0consultation<\/a>\u00a0on the merchant-nose opportunity, industry noted that removing it could add significant risk to their business plans.<\/p>\n

This could make \u201csecuring finance more difficult or more costly at a time of more general market volatility and uncertainty for the industry, and may make the UK market less attractive for investment\u201d, industry suggested within the consultation.<\/p>\n

Cheaper than gas<\/h3>\n

While renewables have been hit by significant supply chain and inflationary cost pressures since last year\u2019s auction, they remain the UK\u2019s cheapest way to source new electricity generation.<\/p>\n

Indeed, while industry estimates suggest the cost of offshore wind might have climbed by 20-40% (see above), a major cause is the global energy crisis\u00a0triggered<\/a>\u00a0by surging fossil fuel prices.<\/p>\n

After years of rapid cost reductions for wind and solar, this year\u2019s auction saw the \u201cstrike price<\/a>\u201d of winning onshore wind bids rise by around a quarter, while solar bids were essentially unchanged.<\/p>\n

In parts of 2022, UK wholesale gas prices surged\u00a0more than 10-fold<\/a>. This saw the winning bids in last year\u2019s CfD auction coming in some\u00a0nine times cheaper<\/a>\u00a0than gas power in August last year.<\/p>\n

While gas prices have since settled down, they remain roughly double their level before the crisis\u00a0\u2013\u00a0in other words, a 100% increase\u00a0\u2013 as shown by the dotted black line in the figure below. (This dotted line shows power prices, which are a reasonable proxy for the cost of gas power.)<\/p>\n

This means renewables are and will remain significantly cheaper than gas. This would also have been true for offshore wind, even if prices had risen by 40%, indicated by the final red dot.<\/p>\n

\"\"<\/p>\n

Government estimates of the levelised cost of energy (LCOE) from various technologies (solid lines) versus CfD strike prices and power prices (dashed lines). Figures are all in \u00a3(2023) per megawatt hour (MWh) of electricity, plotted against the year of delivery. Source: Carbon Brief analysis of government cost projections published in\u00a02010<\/a>,\u00a02011<\/a>,\u00a02011<\/a>,\u00a02013<\/a>,\u00a02016<\/a>\u00a0and\u00a02020<\/a>\u00a0and CfD auction results from\u00a02015<\/a>,\u00a02017<\/a>,\u00a02019<\/a>,\u00a02022<\/a>\u00a0and\u00a02023<\/a>, with all prices adjusted to \u00a32023 using the\u00a0Treasury deflator<\/a>. Past power prices are weekly, monthly or yearly average day-ahead prices from\u00a0Nordpool<\/a>\u00a0and forecast annual average prices are from\u00a0Cornwall Insight<\/a>. Chart by Simon Evans for Carbon Brief using\u00a0Datawrapper<\/a>.<\/em><\/p>\n

EU consumers are estimated to have saved \u20ac100bn due to wind and solar projects newly installed during 2021-2023,\u00a0according<\/a>\u00a0to the\u00a0International Energy Agency<\/a>\u00a0(IEA).<\/p>\n

The global power sector saved $520bn in 2022 thanks to already installed renewables,\u00a0according<\/a>\u00a0to the\u00a0International Renewable Energy Agency<\/a>\u00a0(IRENA). It noted that the competitiveness of renewables increased, despite cost inflation, because fossil fuel prices rose even further.<\/p>\n

The agency said in an August\u00a0release<\/a>:<\/p>\n

\u201cIRENA\u2019s report concludes that expected high fossil fuel prices will cement the structural shift that has seen renewable power generation become the least-cost source of new generation, even undercutting existing fossil fuel generators. Renewables can protect consumers from fossil fuel price shocks, avoid physical supply shortages and enhance energy security.\u201d<\/p><\/blockquote>\n

Moreover, as shown in the chart above, UK gas prices\u00a0\u2013\u00a0which generally set the price of power overall \u2013 are\u00a0expected<\/a>\u00a0to remain high for much of the 2020s.<\/p>\n

The wholesale price of electricity is expected to remain at current elevated levels for several years. The\u00a0latest forecast<\/a>\u00a0from consultancy\u00a0Cornwall Energy<\/a>\u00a0has power prices topping \u00a3120 per megawatt hour (MWh) until 2025, falling slowly below \u00a3100\/MWh in the years to 2030 as larger volumes of renewables start to eat into the running hours for gas.<\/p>\n

High gas prices for years to come mean consumers could have saved\u00a0around \u00a3180m a year<\/a>\u00a0for each 1GW of offshore wind secured in today\u2019s auction, according to thinktank the\u00a0Energy and Climate Intelligence Unit<\/a>\u00a0(ECIU), even with project costs rising 20-40%. A similar\u00a0estimate<\/a>\u00a0from Energy UK puts the saving at around \u00a3100m in 2030, for each 1GW of offshore wind secured.<\/p>\n

In a\u00a0statement<\/a>\u00a0responding to the auction result, trade group\u00a0RenewableUK<\/a>\u00a0says:<\/p>\n

\u201cIn this auction round for clean power contracts, up to 5GW of offshore wind was eligible to compete which could have powered nearly 8m homes a year and saved consumers \u00a32bn a year compared to the cost of electricity from gas \u2013 a \u00a324 annual saving on an average household bill. However, offshore wind projects did not bid into the auction as a result of the maximum price being set too low.\u201d<\/p><\/blockquote>\n

(Note that while the amount of electricity generated by wind and solar farms is variable, necessitating grid flexibility and\u00a0long-term energy storage<\/a>\u00a0to ensure security of supply, they remain the most competitive technologies to decarbonise UK electricity supplies, according to the\u00a0government<\/a>\u00a0and most other analysts. The government\u2019s advisory Climate Change Committee puts the\u00a0costs of integrating<\/a>\u00a0wind and solar into the grid at \u00a310-20\/MWh.)<\/p>\n

Targets at risk<\/h3>\n

The failure to secure any new offshore wind in the latest auction round means the UK\u2019s \u201c50GW by 2030\u201d target for the technology looks increasingly remote.<\/p>\n

The UK\u2019s current offshore wind capacity stands at 15GW,\u00a0according to<\/a>\u00a0industry body\u00a0Renewable UK<\/a>. A further 12GW is in the pipeline\u00a0\u2013 though at least one of the projects within this total has been suspended due to inflationary cost pressures. This means the UK would need to secure another 23GW of offshore wind capacity to hit its 2030 target of 50GW.<\/p>\n

Auctions are now held annually, but winning projects still take several years to build.<\/p>\n

The fourth auction round announced results in August 2022 and the offshore wind projects it contracted will not come online until 2026 at the earliest\u00a0\u2013 around four years later.<\/p>\n

This implies that the capacity needed to hit the 50GW target would need to be contracted by 2026 at the latest\u00a0\u2013\u00a0meaning the next three auctions would need to secure nearly 8GW each.<\/p>\n

A more conservative\u00a0analysis<\/a>\u00a0from Energy UK suggested the necessary capacity would all need to be contracted by 2025, leaving only two auctions to secure nearly 12GW each.<\/p>\n

For comparison, last year\u2019s fourth round secured 7GW of capacity.<\/p>\n

The UK\u2019s current and contracted offshore wind capacity (grey area) and the increasingly steep curve to hit the 50GW target following this year\u2019s auction result is shown in the figure below.<\/p>\n

The yellow curve indicates the pace of growth that would have been needed if the UK had secured 6GW of capacity this year and in the next three auctions, with projects being delivered four years after contracts are signed. The pink and red curves show how this trajectory is squeezed if the target has to be met over just three or two auction rounds, respectively.<\/p>\n

\"\"<\/p>\n

Cumulative operating or contracted UK offshore wind capacity (grey area), gigawatts (GW), and the trajectory to meeting the \u201c50GW by 2030\u201d target over the course of four auction rounds starting from 2023 (yellow), three auction rounds (pink) or two rounds (red). Source: Energy UK and Carbon Brief analysis. Chart by Simon Evans for Carbon Brief using\u00a0Datawrapper<\/a>.<\/p>\n

Adam Bell<\/a>, director of policy at consultancy\u00a0Stonehaven<\/a>\u00a0and a former senior energy official tells Carbon Brief the UK could still \u201cjust about do it\u201d, but only if the government \u201cpulled out all the stops\u201d in areas including rapid reforms to the offshore wind planning and consenting regimes.<\/p>\n

He adds: \u201cI see no indication we\u2019d make such a radical change in time.\u201d<\/p>\n

With offshore wind due to form the backbone of the UK\u2019s net-zero electricity system, the failure to secure new capacity in the latest auction also puts the government\u2019s 2035 target to decarbonise the electricity system \u2013\u00a0and its wider, legally binding carbon budgets\u00a0\u2013\u00a0at risk.<\/p>\n

In an emailed statement, Greenpeace UK policy director Dr Doug Parr says:<\/p>\n

\u201cThanks to cost pressures and inept government policy, this auction round has completely flopped \u2013 denying billpayers access to cheap, clean energy and putting the UK\u2019s legally binding target of decarbonising power by 2035 in greater jeopardy. It leaves the UK more dependent on expensive, imported fossil gas.\u201d<\/p><\/blockquote>\n

RenewableUK says in a statement:<\/p>\n

\u201cIndustry is warning that the failure to secure any new offshore wind capacity risks putting our energy security and net-zero targets at risk, keeping the UK dependent on fossil fuels for longer\u2026National Grid forecasts that \u2013 regardless of progress on other renewables and nuclear \u2013 we will need at least 73GW of offshore wind by 2035 to decarbonise the grid.\u201d<\/p><\/blockquote>\n

What comes next<\/h2>\n

With the UK\u2019s offshore wind targets now deemed at risk, there remains a number of questions about what comes next.<\/p>\n

The fallout of \u201cbotched\u201d AR5 will fall to the newly appointed secretary of state Clare Coutinho, notes Mike Childs, Friends of the Earth\u2019s head of policy. She \u201cneeds to get a grip on her failing department \u2013 and quickly\u201d.<\/p>\n

One potential step forwards is for the government to review the parameters of the auctions ahead of AR6, argues consultancy\u00a0KPMG<\/a>.<\/p>\n

This is echoed by others, such as trade association\u00a0RenewableUK\u2019s<\/a>\u00a0executive director for policy and engagement,\u00a0Ana Musat<\/a>, who says in a\u00a0statement<\/a>:<\/p>\n

\u201cWe urgently need government to provide reassurance that next year\u2019s auction round will offer investable parameters and that, in the longer term, a joined-up strategy for maximising the potential of the offshore wind sector is developed.\u201d<\/p><\/blockquote>\n

Similarly, Rebecca Williams, global head of offshore wind for GWEC, suggests on Twitter that auctions will need to take into account inflationary pressures in auction design \u2013 this would bring auctions more closely aligned to others internationally, such as\u00a0Ireland\u2019s<\/a>\u00a0which secured\u00a03GW of offshore wind<\/a>\u00a0capacity at competitive prices in May.<\/p>\n

Additionally, it needs to take into account increased global competition in the offshore wind sector, stop the \u201crace to the bottom policy\u201d and bring in \u201cproper industry strategies\u201d, she adds.<\/p>\n

The need to take into account rising global competition \u2013 in particular, in light of the success of the US\u2019s\u00a0Inflation Reduction Act<\/a>\u00a0and the EU\u2019s\u00a0Green Deal<\/a>\u00a0\u2013 was also highlighted by\u00a0Energy UK\u2019s<\/a>\u00a0chief executive,\u00a0Emma Pinchbeck<\/a>.<\/p>\n

In a\u00a0statement<\/a>, she says:<\/p>\n

\u201cThe government needs to ensure future auctions recognise the increased costs to develop and build critical infrastructure in the current climate, and produce a robust response to growing global competition for clean energy from the US and EU in the upcoming Autumn budget.\u201d<\/p><\/blockquote>\n

Other suggested changes from industry include reforms to development consent and seabed leasing, or more radically moving offshore auctions onto a capacity rather than energy basis, as\u00a0Adam Bell<\/a>, head of policy at the consultancy\u00a0Stonehaven<\/a>, notes.<\/p>\n

In an\u00a0article<\/a>\u00a0on LinkedIn, Bell writes:<\/p>\n

\u201cI think the change that would most restore trust in the rationality of the system is to remove the scheme from government entirely and hand its development to the Future System Operator. The FSO is already planning where all the pylons will go and will have a much better understanding of the actual capacity requirements of the system, reducing the risk of over-procurement.<\/p><\/blockquote>\n

\u201cHowever, the FSO is increasingly the designated vessel for problems that are seen as too hard for the rest of government to solve, so this may be a bridge too far for its function.\u201d<\/p><\/blockquote>\n

Some<\/a>\u00a0in the industry have also suggested that the auction could be rerun.\u00a0Jess Ralston<\/a>, energy analyst at the ECIU, for example, says in a statement: \u201cThe industry says our offshore wind market, the second largest in the world, is ready to deliver. Will the government rerun this auction with sensible strike prices?\u201d<\/p>\n

If there was a rerun of the auction, it would not take a significant adjustment in the ASP to make it more attractive to the offshore wind sector, suggests\u00a0Thomas Edwards<\/a>, senior modelling consultant at\u00a0Cornwall Insight<\/a>, on\u00a0Twitter<\/a>.<\/p>\n

Increasing it by \u201c\u00a310\/MWh higher it would still have been a good deal IMO, with long-term power prices forecast around \u00a360\/MWh\u201d, he writes.<\/p>\n

An analyst at one major offshore wind developer tells Carbon Brief that, in addition to raising ASPs, other steps could be taken to make CfD prices competitive, such as extending them from 15 to 20 years and targeting capital allowances.<\/p>\n

Extending the CfD by five years has a \u201csurprising impact\u201d due to \u201cmerchant tail risk\u201d after the CfD ends, which is pretty big for a ~35 year asset, they note. This is due to\u00a0price cannibalisation<\/a>\u00a0exposure, the levers to address which lie with policy and regulation and are therefore outside of the control of developers.<\/p>\n

Additionally, the review of electricity market arrangements (REMA<\/a>) is \u201cstarting to bite\u201d, the analyst notes, with the prospect of the UK moving to a nodal or zonal pricing structure impacting investor appetite.<\/p>\n

While REMA currently provides uncertainties, Regen has called for reforms to the CfD to be brought forward to provide a better solution for negative price periods. The current negative price rule, which sees CfD payments cease, introduces too much investment risk and market distortion, it notes.<\/p>\n

This is one of a number of\u00a0suggestions<\/a>\u00a0from the market insight company\u00a0Regen<\/a>\u00a0following the AR5 results, chief of which is for the government to make an immediate announcement that it intends to increase support for offshore wind, highlighting the continued ambition of the UK.<\/p>\n

Additional suggestions for next steps from Regen include convening a taskforce of industry and supply chain partners to \u201cinterrogate what is happening with industry costs\u201d, review and amend the CfD pot structure to separate offshore wind from onshore wind and solar, accelerate grid investment and reset the ASP on the basis of the cost review developed by the taskforce and the cost of capital.<\/p>\n

Others suggest that the UK could look at other avenues of support. For example, GEWC\u2019s Williams tells Carbon Brief that the UK could take on board lessons from the IRA, which creates incentives with industrial strategy elements.<\/p>\n

\u201cIt\u2019s the overall package, not just the price,\u201d Williams says.<\/p>\n

According to Offshore Energies UK\u2019s (OEUK<\/a>) latest\u00a0Economic Report<\/a>, \u00a380bn could be spend on offshore wind investments by 2030. But around half of that is waiting on final investment decisions from businesses that \u201cneed to be presented with a commercially attractive offering\u201d, according to sustainability and policy director\u00a0Mike Tholen<\/a>.<\/p>\n

The\u00a0draft allocation framework<\/a>\u00a0for next CfD auction is expected in mid-november, ahead of the AR6 application window opening on 19 April 2024.<\/p>\n

Dan McGrail<\/a>, chief executive officer of\u00a0RenewableUK<\/a>, writes on\u00a0LinkedIn<\/a>\u00a0that the government must move \u201curgently to rebuild investor confidence in this vital industry and demonstrate internationally that the UK is open for business for offshore wind\u201d.<\/p>\n

Ahead of the next auction, there are a few simple steps it can take, he suggests. This includes getting the design of the next auction right, with sensible and sustainable prices, publishing the design quickly and ensuring it is big enough to \u201cmake up lost ground\u201d.<\/p>\n

McGrail finishes:<\/p>\n

\u201cThese results today put a great opportunity for economic growth on hold. UK energy bills will be \u00a32 billion higher for an extra year, thousands of jobs that would have been created are delayed, \u00a310 billion of investment is delayed, and the 32,000 people who work in our sector will not be able to do what they do best, which is build world class infrastructure based on British ingenuity.<\/p><\/blockquote>\n

\u201cLet\u2019s make sure this is a turning point.\u201d<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

A UK government auction has secured just 3.7 gigawatts (GW) of new renewable capacity \u2013 only a third of the total last year \u2013 and failed to contract any new offshore wind.<\/p>\n","protected":false},"author":128238,"featured_media":3498337,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[79716,213529],"tags":[110931,251358,251959],"class_list":["post-3498329","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-energy","category-energy-featured","tag-offshorewindpower","tag-uk-energy-policy","tag-uk-renewable-energy"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.resilience.org\/wp-json\/wp\/v2\/posts\/3498329","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.resilience.org\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.resilience.org\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.resilience.org\/wp-json\/wp\/v2\/users\/128238"}],"replies":[{"embeddable":true,"href":"https:\/\/www.resilience.org\/wp-json\/wp\/v2\/comments?post=3498329"}],"version-history":[{"count":0,"href":"https:\/\/www.resilience.org\/wp-json\/wp\/v2\/posts\/3498329\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.resilience.org\/wp-json\/wp\/v2\/media\/3498337"}],"wp:attachment":[{"href":"https:\/\/www.resilience.org\/wp-json\/wp\/v2\/media?parent=3498329"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.resilience.org\/wp-json\/wp\/v2\/categories?post=3498329"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.resilience.org\/wp-json\/wp\/v2\/tags?post=3498329"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}