The UK has developed a world-leading position in offshore wind due to sustained government policy support. The success of our offshore wind sector has delivered billions of pounds of investment. It has achieved greater energy security and played a key role in the UK delivering its legally binding carbon reduction targets.
However, the message from industry is that government has a short window to act. It must ensure the UK remains an attractive place to develop offshore wind within a competitive global marketplace. It is, therefore, disappointing that government has yet to publicly respond to the failure of the CfD Auction Round (AR) 5 to attract any offshore wind bids.
In Regen’s letter to the Secretary of State, we urge the government to implement the following recommendations:
- Make a strong public response restating its commitment to take the steps required to deliver the 50 GW by 2030 offshore wind target.
- Convene a task force with industry and their supply chain partners to interrogate what is happening with industry costs. Price competition within the CfD auctions needs to be balanced with a realistic appraisal of what a sustainable price would be.
- Reset the Administrative Strike Prices (ASPs) and budgets for offshore wind in AR6 based on the evidence of the task force cost review.
- Review and amend the CfD pot structure to maximise volume of both fixed and floating offshore wind in AR6 and beyond.
- Adopt a new approach for floating offshore wind, recognising its early stage of development. A bespoke CfD arrangement should be informed by a strategic review of current demonstration projects. In particular, a ringfenced minima and increased contract term could help with cost reduction and investment risk.