The UK government has announced a record-breaking budget of over £1.5 billion for its latest renewable energy auction, marking a significant increase of £500 million from previous allocations. This move, unveiled by Energy Secretary Ed Miliband, aims to accelerate the country’s transition to clean energy by 2030, boosting energy security, reducing reliance on fossil fuels, and fostering economic growth.
Major Investments in Offshore Wind and Emerging Technologies
A key component of this initiative is the substantial investment of £1.1 billion in offshore wind, which Miliband described as the “backbone of the UK’s clean energy mission.” The budget for offshore wind in this auction surpasses the combined total of all previous auctions, signaling strong government support for the sector. Additionally, £185 million is allocated for established technologies like onshore wind and solar, and £270 million for emerging technologies, including floating offshore wind and tidal energy. These investments are intended to stimulate industry confidence, attract cutting-edge technologies, and support job creation in industrial and coastal communities.
The funding is part of the government’s Contracts for Difference scheme, which ensures developers receive a guaranteed price for the electricity they generate, providing stability and encouraging investment. This scheme has already proven effective, with payments during Winter 2022/2023 reducing household energy costs by around £18.
Energy Minister Michael Shanks emphasized the importance of connecting more renewable energy projects to the grid to enhance energy security and achieve the UK’s clean power goals. The government’s commitment to renewable energy is further demonstrated by recent actions, such as lifting the ban on onshore wind and approving large-scale solar farms.
Last week the government launched Great British Energy in partnership with the Crown Estate, backed by £8.3 billion of new money, which is estimated to create up to 20-30GW of new offshore wind developments reaching seabed lease stage by 2030
Industry Response and Future Outlook
Industry leaders have welcomed the budget increase, viewing it as a crucial step towards meeting the UK’s 2030 clean energy targets. The upcoming auction, set for August 2024, is expected to play a pivotal role in advancing the UK’s position as a global leader in renewable energy and securing a sustainable, low-cost energy future.
Dan McGrail, Chief Executive of Renewables UK, said “It’s great to see government choosing to unlock more investment in renewable energy projects by increasing the budget for the next Contracts for Difference auction. These new wind and solar farms will improve our energy security, drive economic growth, support thousands of new green jobs and ensure we continue to create a lowest cost electricity system for billpayers.
This builds on a series of positive announcements from government which are increasing investor confidence in the UK, including ending the ban on onshore wind in England and approving new large-scale solar farms.
This auction will not unlock investment in all shovel-ready projects, so the government will need to ensure that the next auction rounds focus on project delivery to ensure we achieve the Prime Minister’s clean power mission and increase the confidence of investors in the UK’s supply chain.”
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