Labour’s clean energy targets may already be in jeopardy just weeks after the party came to power with the promise to quadruple Britain’s offshore wind power, according to senior industry executives.
The offshore wind industry has said there will not be enough time to develop the projects needed to create a net zero electricity system by the end of the decade unless ministers increase the ambition and funding of the government’s upcoming “make or break” subsidy auctions.
A delay to Labour’s planned renewable energy rollout – which calls for a doubling of onshore wind, tripling of solar power and quadrupling of offshore wind capacity – would also risk derailing Britain’s legally binding climate ambition to be net zero overall by 2050.
“It’s crunch time,” said Damien Zachlod, managing director of the UK arm of the German energy company EnBW. “How close we get to the government’s 2030 offshore wind target depends on whatever happens in the next 18 to 24 months.”
The government may have already missed its chance to meet its 2030 target, according to Zachlod, because “the fastest that you could develop an offshore windfarm is seven years” and “more often than not it takes 10 to 12 years”.
Senior wind power executives fear the industry may fall further behind the 2030 target because the government’s summer auction for offshore wind subsidy contracts, which are paid through home energy bills, is only large enough for a fraction of the developers eager to build windfarms off the UK coast to secure a deal.
They have called on Ed Miliband, the energy secretary, to almost double the budget for the £800m auction so that more projects can secure a contract and accelerate the industry’s progress towards the 2030 target.
The intervention comes after one of the UK’s leading energy analysis providers warned that a “step-change” in government policy was required to bring forward £48bn in private spending to close the renewable investment gap needed to meet its 2030 targets.
The government set out plans last week for GB Energy, its state-owned power company, to partner with the king’s property management firm, the crown estate, to accelerate the development of enough offshore wind to power 20m homes. This is expected to benefit projects that begin generating electricity in the 2030s but do little to meet the near-term target.
Keith Anderson, the chief executive of Scottish Power, one of Britain’s biggest renewable energy investors, said that even if the government allows more developers to compete in the auction this summer there will “still be developers lining up to compete for contracts in the auction in one year’s time”.
This is partly because the previous Conservative government failed to award a single offshore wind contract in last year’s auction by setting the price too low, in what critics have called the biggest clean energy policy failure in almost a decade.
Anderson added that there was a “very low risk” of the new government saddling households with higher energy bills by encouraging more projects to be built because the cost of offshore wind is below forecasts for future energy market prices.
“There is a big opportunity here to invest in the future of the UK’s clean growth, and a lot of projects which are ready to take that up. Now is the time for the government to go faster,” Anderson said.
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Nathan Bennett, the head of communications at RenewableUK, said more than 10GW-worth of new offshore wind was eligible for bids in this summer’s auction, but the current funding available would only be enough for half this capacity.
He said the green energy trade body was urging ministers to raise the budget to allow for more winning bids to “make up lost ground” from last year’s auction and create the substantial pipeline of projects needed to accelerate supply chain investment and growth in the UK.
RenewableUK is understood to have called on ministers to nearly double the £800m funding pot for offshore wind to £1.5bn in the upcoming auction. The government has also set aside £105m for a separate auction for floating windfarms, which should it raise to £464m, according to the trade group.
“We need to make the UK the most attractive business environment to secure the maximum amount of private investment in clean energy in the face of intense international competition,” Bennett said.
A government spokesperson said Miliband was “carefully considering” whether to increase the budget for the summer auction and would “confirm his decision soon”.