Get all your news in one place.
100’s of premium titles.
One app.
Start reading
The Guardian - UK
The Guardian - UK
Environment
Jillian Ambrose

Labour tries to attract clean energy contracts with record £1.5bn for auction

A dozen wind turbines stand in the sea at an offshore wind farm in Wales.
Gwynt y Môr offshore windfarm in Liverpool Bay, off the coast of north Wales. Photograph: Ben Birchall/PA

The Labour government will make record amounts of funding available to clean energy developers after it increased the value of its summer subsidy auction by 50%, to £1.5bn.

The addition, compared with figures previously announced, means the total budget is seven times the amount available at last year’s auction, the government said.

The move aims to reignite investment in the UK’s clean energy industry after the previous government failed to award a single new offshore wind contract last year or remove the blocks on onshore wind.

The government said that increasing the auction round would provide high quality jobs in Britain’s industrial heartlands and coastal communities, while protecting household bills from rises in the global market for fossil fuel by providing more clean energy.

Ed Miliband, the energy secretary, said: “Last year’s auction round was a catastrophe, with zero offshore wind secured, and delaying our move away from expensive fossil fuels to energy independence.”

“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 bill payers, and become a clean energy superpower,” he added.

Offshore wind projects will compete for up to £1.1bn of funding this summer, up from the £800m set by the previous government. This could bring forward investment in 6-7 gigawatts of offshore wind capacity, according to analysts at Jefferies, or enough to power almost 5m homes.

Onshore wind and solar projects will compete for a share of £185m, a rise of £65m from previously announced figures. Ministers will also more than double the funding available to nascent clean energy technologies, such as floating offshore wind and tidal power projects, to a total of £270m.

Miliband set out plans for the investment boom after senior executives warned that Labour’s clean energy targets may already be in jeopardy just weeks after the party came to power with the promise to double onshore wind, triple solar power, and quadruple offshore wind by 2030.

Damien Zachlod, the managing director of the UK arm of the German energy company EnBW, which is developing offshore wind projects with BP, said: “How close we get to the government’s 2030 offshore wind target depends on whatever happens in the next 18 to 24 months.”

Keith Anderson, the chief executive of Scottish Power, which is expected to compete for two offshore wind contracts in the auction, said: “The auction needed a reset after last year and we welcome the increased budget, which is an important investment signal to the industry to make Britain a clean energy superpower, secure more low-cost offshore wind and spur economic growth.”

The contracts guarantee new renewable energy projects at set price for each unit of clean electricity they generate, which is paid for by energy bills.

But the way the contracts are set up means they are not expected to raise costs for consumers. If wholesale electricity market prices fall below the price agreed in the contract, then households face extra charges to top up the difference. But increasingly the cost of renewable energy has fallen below the market price for electricity, meaning these contracts actually pay money back to bill payers.

The reset was revealed as new government data confirmed a record breaking year for renewable energy generation in 2023. Official figures show that renewables provided 46.4% of the UK’s electricity last year, compared with 36.7% from fossil fuels.

Wind power was the UK’s biggest source of clean power, according to the data, after generating a record 28.1% of electricity in 2023, beating the previous record of 24.7% in 2022.

A record 17% of the UK’s electricity was produced by offshore wind compared with 13.8% in 2022, the figures show, while onshore wind provided a record 11.2% compared with 10.8% in 2022.

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
One subscription that gives you access to news from hundreds of sites
Already a member? Sign in here
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.