A UK government auction for offshore wind failed to attract any bids, the latest sign of trouble in an industry that’s crucial to meeting net zero goals.
(Bloomberg) — A UK government auction for offshore wind failed to attract any bids, the latest sign of trouble in an industry that’s crucial to meeting net zero goals.
Only 3.7 gigawatts of fresh projects cleared in the government’s fifth auction round for new renewables, marking a huge drop from the almost 11 gigawatts that were given contracts in last year’s allocation round. The main reason for the huge fall in new capacity was the lack of offshore wind, which is facing rising financing and supply chain costs.
Since 2015, offshore wind developers have been competing to show just how cheaply they can install turbines out at sea. Last year, the technology won the bulk of the new capacity, almost 7 gigawatts, at record low prices. But that success is fading as projects struggle with price pressures.
“While offshore and floating offshore wind do not feature in this year’s allocation, this is in line with similar results in countries including Germany and Spain, as a result of the global rise in inflation and the impact on supply chains which presented challenges for projects participating in this round,” the government said in a statement.
As prices of steel and other inputs have soared some projects are already no longer profitable even with government-supported contracts. In July, Vattenfall shelved its 1.4-gigawatt Norfolk Boreas wind farm in the North Sea, and Orsted AS is struggling to reach financial close on its Hornsea 3 project.
The lack of offshore wind will put further pressure on the government’s target to have 50 gigawatts of offshore wind power by 2030. The UK is expected to fall short of the goal by nearly a third with just 34.4 gigawatts installed by the end of the decade, according to BloombergNEF.
Instead, solar power was the biggest winner, securing contracts totaling 1.9 gigawatts of new capacity. Onshore wind developers took a combined 1.5 gigawatts. There was also success for the UK’s nascent tidal stream industry, winning 53 megawatts and with other technologies making up the rest.
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