Up to 8GW of offshore wind power could be procured through the upcoming Contracts for Difference (CfD) auction round, Keith Anderson has predicted.
The Scottish Power chief executive said that procuring between 7GW and 8GW of offshore wind could be “easily” achieved through this year’s round, leaving a “healthy amount” for 2025’s auction round (AR7).
The government recently announced a quadrupling of the budget for the next round following the failure of AR5 to secure any offshore wind power last year due to a too low strike price being offered.
However, the industry has said that additional offshore wind power could be procured if the auction’s parameters are made even more generous.
However, speaking at Aurora Energy’s Spring Forum, Anderson said that the government’s “nervousness” about holding a “huge auction at the peak of pricing and paying a lot” meant the terms were unlikely to change.
Anderson added: “If I was in charge now in the UK, I would grab seven or eight GWs out of this auction and then get another five or six at the next auction.”
The Scottish Power boss also played down concerns that the supply chain would not cope with an increase in orders: “You get bumps and bashes in the supply chain. I am not massively concerned about supply chain, which is very good at reacting to market signals.”
Earlier at the event, Sam Laidlaw said some supply chains, like those for wind turbines, are in “reasonably good shape”.
But the former Centrica chief executive, who is now on the board of mining giant Rio Tinto, expressed concern about future supplies of critical minerals, like copper and manganese.
He also expressed confidence about future security of supply for liquified natural gas with the evolution of a “more resilient system in terms of diversity” as the US increased its production and new sources emerged in countries like Mozambique.
“We are in a world where we have reasonable gas security”, Laidlaw said, adding that Europe’s ability to withstand a reduction in supplies from Russia has been aided by the “unusually warm weather” that the continent has experienced over the past two winters.
Wind contributed a record 28.7% of the UK’s electricity needs in 2023, which was up by 4% on 2022, according to the government’s latest quarterly Energy Trends publication.
Overall renewables contributed 47.3% of total UK electricity generation, another annual record and up from 41.5% in 2022.
Gas remained the largest single source of generation, accounting for 34.3% of the total.
However overall gas demand fell by 10% compared to 2022, dropping to its lowest level since 1992.
With coal continuing its ongoing decline ahead of a phase-out later this year, generation from fossil fuels dropped to levels not seen since the 1950s, according to Energy Trends, which covered the last quarter of 2023.
And overall electricity demand was 310TWh in 2023, which was the lowest level since the late 1980s.