This year’s starting price for the auction was slightly higher at £44 per MWh in 2012 money, narrowly above the previous winning bids but too low for an offshore project built under today’s cost pressures. By last year’s auction that had fallen to the equivalent of £37.50 per MWh. The cost of offshore wind has tumbled since the government’s first contract auction in 2015, when offshore windfarms secured a guaranteed price of £155 per MWh in 2012 money – the benchmark for these contract auctions. It said earlier this year that it would cease working on the multibillion-pound Norfolk Boreas windfarm because rising costs meant it was no longer profitable. The Swedish energy company Vattenfall estimates that in total its costs have increased by about 40%. Then, the cost of borrowing money to finance the multibillion-pound projects has climbed in line with global interest rates. First, the cost of building and installing wind turbines has rocketed because the price of materials has risen sharply owing to the energy crisis. In the government’s previous clean energy auction, developers bid £37.35 per megawatt hour (MWh) to generate offshore wind power.īut since then the industry has faced a double economic blow that has compounded costs. Until recently, offshore wind was considered Britain’s cheapest source of electricity. However, industry sources said ministers and mandarins “ignored” the warnings. They had called on the government to raise the auction’s starting price, arguing that even at higher costs their electricity would be cheap enough to help lower household energy bills. Offshore wind developers warned that the auction’s maximum price, which was similar to previous auction rounds, was now too low for their projects to make any money. This has helped to drive down the price of renewable energy, but in recent months high inflation has caused costs across the industry to rise. The auction awards a 15-year contract to the clean energy projects that bid the lowest price for the clean electricity they go on to generate. None of the UK’s biggest offshore wind developers took part in the auction after many complained to government ministers and officials that the maximum price had been set too low. So how did things go so far wrong for Britain’s most successful clean energy sector? Why did no offshore wind developers bid?
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |