Onshore wind, biomass and energy from waste could take part in auctions as early as next year, argues a report published by Policy Exchange on Monday. Offshore wind developers should compete in technology-specific auctions and be held to their aspirational target to bring costs down to £100/MWh by 2020.
Author Simon Moore said a government policy that imposes higher costs than necessary “risks failing if public support is lost”.
Policymakers need to overcome their “squeamishness” about ending support to technologies that fail to bring costs down, he added.
That recommendation comes in the week government is expected to publish its final Electricity Market Reform delivery plan, which will include its methodology for allocating renewable support contracts.
Government has stated its intention to move away from administrative price-setting to a more competitive regime over time.
However, earlier in December it confirmed offshore wind will get a guaranteed “strike price” of £140/MWh in 2018/19, an increase on the £135/MWh set out in the draft plan. That was borne out of a desire to give offshore wind suppliers the confidence to set up factories in the UK – a temptation Policy Exchange warned against. “Job creation has been an alluring but misguided part of the debate around renewable energy,” Moore wrote.
Nor was it enough to prevent the cancellation of two major offshore projects: RWE’s Atlantic Array and Scottish Power’s Argyll Array. Centrica also gave up on its struggling Race Bank project, selling it to Dong for £50 million.