Taxpayer guaranteed subsidies secure enough power for 12 million homes but critics warn huge uncertainties remain
The government has announced the UK’s biggest ever expansion of offshore wind in a bid to lower household bills over time.
Energy Secretary Ed Miliband hailed the move – enough to power the equivalent of 12 million homes – as a “monumental step” towards the country’s clean energy goal.
He went on: “Clean, homegrown, power is the right choice for this country to bring down bills for good and this auction will create thousands of jobs throughout Britain.”
But critics claimed the process, in which wind farm operators will benefit from taxpayer-backed guarantees, will actually threaten to lead to higher bills for households for decades. The biggest winner from the latest round of funding will be German energy giant RWE.
Estimates have put the levies on bills at almost £1.8billion a year by the time the proposed wind farms start generating in 2030. However, this is expected to be offset by lower wholesale prices.
Labour has thrown its weight behind wind farms as a way to reduce the UK’s reliance on imported energy, which has fuelled a spike in energy bills for households and businesses in the wake of Russia’s invasion of Ukraine. Ministers also claim it is crucial step to decarbonising the UK, limiting the need for gas-fuelled power stations.
But the green drive has many critics because of the upfront subsidies placed on bills and concerns that the power grid will be unable to cope with flood of new wind farms, risking more occasions when operators will be paid to keep them switched off.
The latest round of funding – in the form of an auction – secured 8.4 gigawatts of wind power.
Mr Miliband said: “With these results, Britain is taking back control of our energy sovereignty. This is a historic win for those who want Britain to stand on our own two feet, controlling our own energy rather than depending on markets controlled by petrostates and dictators.
“It is a monumental step towards clean power by 2030 and the price secured in this auction is 40% lower than the alternative cost of building and operating a new gas plant. Clean, homegrown, power is the right choice for this country to bring down bills for good and this auction will create thousands of jobs throughout Britain.”
Simon Francis, coordinator of the End Fuel Poverty Coalition, said: “These auction results are exactly the kind of outcome households need after years of volatile bills driven by fossil fuels.
“But lower costs on paper must translate into lower bills in reality. Consumers need full transparency on how these contracts will affect prices, clear limits on excess profits across the energy industry and electricity pricing reform so the savings from clean power are properly passed through.”
Dr Douglas Parr, policy director for Greenpeace UK, said: “The North Sea may be running out of gas, but it won’t be running out of wind any time soon. It is the best fuel to reduce the high energy prices gas companies have inflicted on UK homes.
But Sam Richards, chief executive of pro-growth campaign group Britain Remade, said: “The fact that the latest renewable energy auction results have once again increased is hugely disappointing. Not only are these prices high, they are now locked in for 20-years under new contracts with generators. This underscores the urgent need for further radical planning reforms to cut red tape and speed up delivery.”
The latest auction saw offshore wind secured at an average price of £90.91 per megawatt hour which, the government said, is 40% cheaper than the cost of building and operating new gas. It also claimed the process would unlock around £22billion in private investment, supporting around 7,000 jobs.
Winning projects include Dogger Bank South off the coast of Yorkshire and Norfolk Vanguard off East Anglia, two of the largest offshore wind farms in the world, plus Berwick Bank in the North Sea, the first new Scottish project since 2022 and the largest planned offshore wind project in the world.