The Labour government is set to inject an unprecedented level of funding into the clean energy sector, with a 50% increase in the value of its summer subsidy auction, now totaling £1.5 billion.
This surge represents a sevenfold increase compared to last year’s auction, signaling a robust commitment to revitalize the UK’s clean energy landscape.
This initiative comes on the heels of a disappointing year, where the previous administration failed to secure any new offshore wind contracts or lift restrictions on onshore wind projects.
The new government’s aim is clear: to stimulate investment in clean energy, creating quality jobs across Britain’s industrial and coastal regions, while shielding household bills from the volatile global fossil fuel market by enhancing the domestic clean energy supply.
Energy Secretary Ed Miliband didn’t mince words about the previous year’s failures. “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,” he stated.
“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.”
Ed Miliband
Offshore wind projects are slated to compete for a substantial £1.1 billion in funding this summer, an increase from the previous government’s £800 million allocation.
Analysts at Jefferies suggest this could attract investment in 6-7 gigawatts of offshore wind capacity, sufficient to power nearly 5 million homes.
Onshore wind and solar projects will vie for a portion of £185 million, up by £65 million from earlier figures.
Additionally, funding for emerging clean energy technologies, such as floating offshore wind and tidal power projects, will more than double to £270 million.
Miliband’s announcement comes in response to concerns from senior energy executives who warned that Labour’s ambitious clean energy goals might already be under threat.
Labour has pledged to double onshore wind, triple solar power, and quadruple offshore wind capacity by 2030.
Damien Zachlod, managing director of EnBW’s UK arm, highlighted the urgency, stating, “How close we get to the government’s 2030 offshore wind target depends on whatever happens in the next 18 to 24 months.”
Scottish Power Applauds Budget Increase
Keith Anderson, CEO of Scottish Power, which is expected to bid for two offshore wind contracts in the upcoming auction, welcomed the increased budget.
“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.”
Keith Anderson
These contracts guarantee new renewable energy projects a set price for each unit of clean electricity they generate, funded through energy bills.
Notably, these contracts are designed not to increase consumer costs. If market prices fall below the agreed contract price, households cover the difference.
However, with the cost of renewable energy increasingly undercutting market prices, these contracts often result in rebates for billpayers.
This strategic reset coincides with new government data confirming a record-breaking year for renewable energy generation in 2023.
Official figures reveal that renewables supplied 46.4% of the UK’s electricity last year, surpassing fossil fuels’ 36.7% contribution.
Wind power emerged as the dominant clean energy source, accounting for a record 28.1% of electricity generation, up from 24.7% in 2022.
Offshore wind alone produced a record 17% of the UK’s electricity, a notable rise from 13.8% in 2022, while onshore wind contributed 11.2%, up from 10.8% the previous year.
As the Labour government amplifies its investment in clean energy, the UK is poised to reclaim its position as a global leader in green technologies, driving towards a more sustainable and economically resilient future.
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