Rising prices for offshore wind warn of the mounting cost of Net Zero

·      The price for new electricity from offshore wind has risen to £82/MWh in current prices, a significant 58% increase since the previous successful auction.

·      Higher prices will lead directly to higher household bills and the results raise the already astronomical price tag of meeting Miliband’s unrealistic target to decarbonise the power grid by 2030.

·      A loophole in Government contracts could cost households up to £180m a year.

Results for the latest auction (AR6) for renewable energy subsidies, known as Contracts for Difference (CfDs), were released this morning. The auction was the first since the humiliating 5th allocation round (AR5) in which there were no bids for new offshore wind capacity. The Government has secured 3.4GW of new offshore wind capacity by awarding a large increase in price to the technology that it regards as the cornerstone of its energy plans.

The auction had an increased budget of £1.555 billion, having been increased by Miliband. It is the largest CfD auction to date and will therefore lock in far more capacity at higher prices than the previous auction.

Flexibilities in the contracts drawn up by Government officials meant that older wind farm projects could withdraw up to 25% of contracted capacity and re-enter it into this year’s auction, allowing them to take advantage of the higher prices on offer. 1.6 GW of successful bids came from such projects – a loophole that may cost households as much as £180m each year. It’s another slip up for a Department that already allowed just one windfarm to net £647 million from delaying the start of its CfD contract.

Before the election, forecasts produced by Aurora Energy Research found that Labour’s 2030 target to decarbonise the power grid was “unfeasible”, but even these forecasts used over-optimistic numbers for renewable energy costs. These new results show costs to be rising rather than falling, vindicating warnings made repeatedly by Net Zero Watch. If Miliband’s Net Zero plans could once be regarded as unfeasible, they must surely now be seen as ruinous.

Net Zero Watch director, Andrew Montford, said:

How many times were we subjected to the chorus of ‘wind is cheap’? That refrain now rings hollow and these results show Miliband’s green utopianism to be even more costly and impractical than once feared.