UK Expects Return of Wind Bidders

Wind turbines against clouds
Updated Published

In Oslo on February 15, a high-ranking official from the UK government expressed optimism for the upcoming offshore wind auction scheduled for March, following a previous round that did not meet expectations. The official acknowledged that the prior auction, known as AR5, conducted in September, saw no participation from offshore wind developers due to the subsidies being considered insufficient against the backdrop of rising industry cost.

Lord Callanan, the Minister for Energy Efficiency and Green Finance, shared insights with Reuters at an energy conference in Norway, indicating that the government has absorbed the feedback from the AR5 auction. "We’ve learnt the lessons from the AR5 round and we’re hoping that the AR6 round will be much more successful," he remarked.

Callanan highlighted the auction process as a delicate balance between securing favorable commercial terms for companies and achieving value for taxpayers and consumers. He humorously noted, "I’ve never been involved in a negotiating process where business doesn’t think they should get paid more."

In response to these concerns, the UK has adjusted the contract for difference (CfD) strike price for offshore wind projects in the upcoming AR6 round to £73 (approximately $91.70) per megawatt-hour (MWh), aiming to attract more bidders.

Callanan demonstrated renewed interest and confidence in the government's adjustments. He also communicated, “Many of the projects that weren’t successful in AR5 will bid again into AR6.”

The UK, currently holding the position as the world’s second-largest offshore wind market after China, is ambitious in its goal to expand its offshore wind capacity to 50 gigawatts (GW) by 2030, up from the current 15 GW. This expansion is critical for the nation to meet its climate commitments and enhance energy security.

The AR6 auction is set to welcome applications starting March 27, marking a pivotal step towards achieving these ambitious energy and environmental goals.

The exchange rate mentioned is $1 to 0.7961 pounds.