Scottish Power’s chief executive has revealed his company could have bid 1.6GW of offshore wind projects in the latest Contracts for Difference (CfD) auction had the price been right.
Keith Anderson was speaking to Utility Week after no offshore wind projects were included in the fifth allocation round of the scheme.
The energy boss slammed the auction as a “rare misstep” which means the UK has missed out on up to 5GW of new green projects which he said could have taken £1.5 billion off customers’ bills.
Anderson said the poor investment conditions created as a result of the government setting the strike price too low, coupled with soaring costs, meant his company refused to bid into the auction.
He explained: “At Scottish Power we are in the business of building wind farms, not letting them sit on the development shelf. But we cannot do so when the numbers don’t add up.
“We’re a developer with a strong track record of getting costs down and we’re still proceeding with development under contracts won in the last auction, even when others have been unable to do so due to rising prices.
“If things had been different and the investment conditions had been right, we could have bid 1.6GW of projects into the auction – enough to provide 1.5 million homes with low-cost, green electricity – as part of our overall £10 billion plan for the East Anglia Hub of offshore wind developments.”
Utility Week asked Anderson what this means for the future of the East Anglia developments.
In response, he said: “We remain committed to the East Anglia Hub and our projects continue to progress. To meet the 2030 50GW target, the UK needs to deliver more than 30GW of offshore wind in just seven years. We can’t afford to slow the pace or have another year of missed opportunity.
“I’m confident we can work collaboratively with the new secretary of state and her department to correct course quickly and ensure investment in green energy continues to flow. We all want the same thing, to get more secure, low-cost green offshore wind built in our waters and unlock the billions of pounds of investment this country needs to meet its long-term offshore wind ambitions.”
Results from the latest CfD auction have been widely criticised by others in the sector.
Following the announcement, a meeting was held between the government and offshore wind developers. A source from one of the companies told Utility Week that the government’s characterisation of the auction as a success due to the number and volume of contracts awarded to onshore wind and solar projects “went down like a lead balloon”.
Simon Virley at KPMG meanwhile said the lack of new offshore wind projects represented a “major setback at a critical time when we should be looking to accelerate renewables”.
Elsewhere Tom Glover, RWE’s country chair for the UK, said the results announcement led to a day of “mixed feelings” for the company as the failure of offshore wind projects helped it to bag contracts for 450MW of onshore wind and solar projects.
“One side of the business is celebrating and the offshore wind business is in the dark doldrums of depression,” he said.