Open subsidy program for offshore wind farms, urges Scottish Power | Environment

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One of Britain’s biggest wind power developers has called on the government to remove the limit on its upcoming offshore wind subsidy auction to help fuel a green economic recovery, saying it will not lead to a rising energy bills.Scottish Power has urged government officials to open up next year’s offshore wind grant auction to as many new projects as possible in order to generate a “huge wave” of investment and jobs after the pandemic.

In previous auctions, the government has capped the amount of renewable energy that can win a subsidy contract, which is paid for by energy bills, to encourage developers to cut costs.

But Keith Anderson, chief executive of Scottish Power, said there was “minimal risk” to household energy bills because the cost of offshore turbines is now so low that the projects could even help make cheaper British energy.

“At this point, you are guaranteed excellent value for money. And what do you earn? A huge wave of investment in UK supply chain companies and a major boost for the economy, ”he said.

The government is currently consulting on new ways to manage renewable energy subsidy auctions, which could include setting the starting level, or reserve price, in line with energy market price forecasts so that payers of energy bills are not called upon to supplement the subsidies.

This could mean more wind farms are awarded a contract, at no additional cost to billpayers.

“Why limit investments when we could make the most of what we have to develop the renewable energy sector?” Anderson said. “We know we need more renewable energy, let’s just go ahead.”

In the last auction round, in September 2019, winning bids from offshore wind farm developers fell by a third to around £ 40 per megawatt hour, which is lower than the price of electricity on the wholesale market of energy.

Energy market experts said record subsidy levels could mean households won’t face additional costs to support projects when they start generating electricity, and could even face additional costs. help reduce their energy bills.

A European-wide study of wind energy subsidies from Imperial College confirmed last week that UK projects are likely to be the world’s first “negative subsidy” offshore wind farms.

Dr Malte Jansen, lead researcher on the study, said: “Energy subsidies were increasing energy bills, but in a few years cheap renewables will see them reduced for the first time. It is an amazing development. “

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Subsidies are awarded through contracts that set the amount that generators can earn for each megawatt hour of electricity produced through a “strike price”. If the wholesale market price of energy is lower than the strike price, the payers supplement the profits, but if the strike price is lower than what the generators earn in the wholesale market, they must repay the profit. difference.

Imperial’s forecast for wholesale energy prices in the mid-2020s suggests that the strike price for new offshore wind farms is likely to be lower, meaning the generators will effectively help pay the oil bills. household energy.

Dr Iain Staffell, of the Imperial Oil Center for Environmental Policy, said the new wind farms would be “essential” to help the UK meet its net zero carbon targets “with the added benefit of reduce consumers’ energy bills ”.

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