The shameless blackmail by the wind industry is a golden opportunity for the Chancellor

The government should reject the wind industry’s crude blackmail and cancel contracts that appear to have been obtained on the basis of false representations.

Further details are now emerging of the offshore wind industry’s attempt to obtain additional support for unbuilt projects, first reported by the Financial Times, and the subject of a Net Zero Watch statement (“Demands for more subsidy expose the illusion of falling wind power costs”).

The Times is now reporting that the Danish state-controlled wind giant Ørsted is threatening to cancel the £8 billion Hornsea Three wind farm, the world’s biggest, unless it is given more UK government support through “enhanced capital allowances”.

Hornsea Three was amongst five projects that bid very low prices for UK government Contracts for Difference in 2022. Ørsted claims that it is not alone, and that all these projects are now “in jeopardy”.

The justification offered for this threat is that the company is facing “very extraordinary circumstances” that have increased its costs.

However, since the contracts are inflation-linked in any case, and world steel prices have actually fallen since Ørsted submitted its CfD bid for Hornsea 3, Net Zero Watch does not accept this explanation.

On the contrary, we refer once again to analysis that we and others have published over the years, demonstrating from audited financial statements that wind CAPEX and OPEX have not fallen significantly, and that the CfD bids were never realistic.

We predicted that these companies would eventually return to government demanding even more support. We were widely criticised at the time for this work, with one prominent energy reporter stating that it was bizarre to believe that the wind companies were “banking on threatening to go bust” in order to blackmail government into further subsidy. However, this is precisely the situation that is now emerging.

A government spokesperson has been quoted to the effect that Hornsea Three’s “inflation-linked contract was already generous” but they were “open to listening to the sector about concerns they may have”.

The Chancellor may choose to listen, but he should reject the industry’s crude blackmail, and indeed take it as a golden opportunity to cancel contracts that appear to have been obtained on the basis of false representations.

Dr John Constable, Net Zero Watch's director of energy, said:

From 2002 to 2022, the offshore wind industry in the UK has received about £20 billion in subsidy, charged on consumer bills and mostly under the Renewables Obligation. If offshore wind is not yet showing real cost reductions it is unlikely ever to do so. The Chancellor should stand up for consumers and taxpayers and say that enough is enough.”