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File Photo: Wind farm in the North sea off the coast of United Kingdom.

File photo: Riekelt Hakvoort/Shutterstock

UK Government Expects Bidders to Return to Offshore Wind Auction

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February 15, 2024

OSLO, Feb 15 (Reuters) – Britain has learned the lessons of last year’s failed offshore wind auction and expects bidders will make a comeback in the new round to take place in March, a senior government official said on Thursday.

A wider renewable energy auction, called AR5, held in September failed to attract any bids from offshore wind developers, who deemed the subsidies on offer too low to keep up with wider cost increases in the industry.

“We’ve learnt the lessons from the AR5 round and we’re hoping that the AR6 round will be much more successful,” Lord Callanan, minister for energy efficiency and green finance, told Reuters on the sidelines of an energy conference in Norway.

Auctions are always a process of negotiation between companies seeking the best commercial price and the government objective to obtain the best price for taxpayers and bill payers, Callanan said.

“I’ve never been involved in a negotiating process where business doesn’t think they should get paid more,” he added.

Still, the British government increased the strike price for a contract for difference (CfD) offered to offshore wind projects in the sixth round to 73 pounds($91.70) per megawatt hour (MWh).

“Many of the projects that weren’t successful in AR5 will bid again into AR6,” Callanan said.

Britain is already the world’s second-largest offshore wind market after China, and seeks to ramp up its capacity to 50 gigawatts (GW) by 2030 from around 15 GW now, to help meet its climate targets and boost energy security.

The AR6 auction round is scheduled to open to applications on March 27.

($1 = 0.7961 pounds)

(Reporting by Nora Buli; editing by David Evans)

(c) Copyright Thomson Reuters 2024.

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