UK to 'increase offshore CfD strike price cap'

15 November, 2023
ReNews

The UK government is to increase the offshore wind strike price cap in next year’s Contracts for Difference auction.

Officials are to set the so-called Administrative Strike Price at around £70 to £75 per megawatt-hour, according to Sky News.

The rate would be a significant increase on the £44/MWh cap set for this year’s AR5, which attracted no bids from offshore wind developers.
Moves by Energy Secretary Claire Coutinho (pictured) and her officials to drive up the ASP substantially in response to lobbying were first reported by subscriber-only reNEWS on 26 October.

Sky News said the formal announcement by UK Energy Department DESNZ is likely to come this week.

It follows intense lobbying by industry with senior executives warning officials 40% cost increases in offshore wind meant the lower strike prices were not economically viable.

Developers are likely to welcome the new auction parameters but will be keen for additional details, including the round’s budget.

That is not expected to be published until the new year and the industry is seeking a generous allocation to ensure most of the eligible pipeline of offshore wind projects can enter sustainable bids.

Sam Richards, founder and campaign director for campaign group Britain Remade, welcomed reports the strike prices are to be increased.

“Even with this increased price offshore wind is still much cheaper than gas, meaning millions of households up and down the country can benefit from one of the cheapest sources of energy," he said.

“Thanks to the Contract for Difference system the offshore industry has been able to drive down costs. But offshore wind could be made even cheaper by slashing red-tape, tackling bureaucracy and reforming our outdated planning system which means it can take up to 13 years for a new offshore wind farm to be completed despite constructing the actual turbines only taking two years.

“Hopefully this news will restore confidence in the offshore wind sector and Britain can once again secure billions in investment and see vital jobs created.”