Record £1.5bn price set for UK’s next renewable energy auction
The new Labour government has boosted the budget for an upcoming renewable energy auction to £1.5bn after last year’s auction failed to attract any bids.
Contracts for Difference auctions invite companies to bid to develop renewable energy projects in the UK and give them a guaranteed minimum price for the electricity they will generate. The system also means that if electricity prices in the future rise above that level, the companies pay the excess back to the treasury.
But the last auction in September attracted no developers , with the industry saying that the government had set the price too low to make new projects worth pursuing.
Energy secretary Ed Miliband today announced that the budget for this year’s renewable energy auction is being increased by £500m to over £1.5bn as part of efforts to build new green infrastructure.
Some £1.1bn of this is dedicated solely to offshore wind, which will now have more budget available than all of the previous auctions combined.
Figures from June showed that China and the UK have retained their top positions in offshore turbine building at 36.7GW and 14.7GW operational capacity respectively. The UK was also found to have the second largest pipeline of future projects at 96GW.
As part of its manifesto commitments, Labour promised to entirely decarbonise the UK’s energy grid by 2030, which included pledges to double onshore wind, triple solar power and quadruple offshore wind.
Labour also said that the recent cost-of-living crisis was partly due to the UK’s over-reliance on fossil fuel markets, which saw record price rises following the war in Ukraine.
“Last year’s auction round was a catastrophe with zero offshore wind secured, delaying our move away from expensive fossil fuels to energy independence,” Miliband said.
“Instead, we are backing industry to build in Britain, with this year’s auction getting its biggest budget yet. This will restore the UK as a global leader for green technologies and deliver the infrastructure we need to boost our energy independence, protect billpayers and become a clean energy superpower.”
Government statistics published yesterday showed that renewable energy generated a record annual percentage of the UK’s electricity last year. The annual report showed that the share of renewables increased to a record 46.4% – up from 41.7% in 2022 – largely due to wind and solar generation.