Westminster Notes - ‘Arrogance’ leads to setback for renewable energy price

There were no bids for Offshore Wind, despite multiple Scottish projects being ready to go.

This is because the results have come in revealing how many energy companies have bid into the UK’s Auction Round 5 for licences to build and operate renewable energy projects within the UK.

This sees the Government set a ‘Strike Price’ at which a given form of energy will be bought from a generator. When the actual market electricity price falls below this set price the energy generator is subsidised with the difference, but where the energy price rises above this set figure the generator pays back the difference to the public purse, in effect delivering a guaranteed return on investment for generators.

This year, the Strike Price for Offshore Wind was set at £44 per Megawatt Hour. This seems a reasonable increase over last year’s £37.50 per Megawatt Hour, except that we live in deeply unreasonable times, with rising interest rates on borrowing and the crippling cost of the UK’s inflation crisis which is especially severe in construction.

The Government was warned by industry and opposition MPs that £44 would likely yield no bidders for offshore wind - including myself as the SNP’s new Energy Spokesperson. Offshore really matters to Angus, but regardless, all protest went unheeded and a predictable catastrophe unfolded where not a single bidder for Offshore Wind came forward despite multiple Scottish projects being ready to go.

This disaster mirrors precisely what happened in Spain with their last auction round. Forewarned should have meant forearmed. Ireland, seeing what happened in Spain, reviewed their Strike Price to better reflect the prevailing economic conditions in an intelligent and consensual manner of government. Not so at Westminster where the Government’s arrogance and intransigence saw them stick to £44 resulting in a zero return – a total humiliation. I have called on the department to convene an ‘Auction Round 5 Recovery Team’ to help get these deliverable and consented projects back online, but received no answer from ministers.