UK raises guaranteed prices for RE projects, offshore wind to get 66% more, solar up 30%

The UK has announced increases in the country's guaranteed price renewable energy projects after a review of the country's 'maximum strike price' for such projects.

The biggest increase is for offshore wind farms, which will get 66 percent more, after the country's previous offshore wind auction failed to attract bidders. The maximum strike price for offshore wind farms had been increased to £73/MWh from £44/MWh, while the maximum strike price for floating wind farms would rise 52 percent to £176/MWh from £116/MWh.

The government has also decided to create a separate funding pot for offshore wind projects in auctions henceforth, in recognition of the high number of projects that it said were "ready to participate".

In the release, the government said it had decided to raise "the maximum price offshore wind and other renewables projects can receive in the next Contracts for Difference (CfD) auction" following a review of the "latest evidence, including the impact of global events on supply chains".

"We recognise that there have been global challenges in this sector and our new annual auction allows us to reflect this," UK Energy Security Secretary Claire Coutinho said in a statement.

Britain's CfD scheme offers renewable projects a guaranteed price for the power they generate. The subsidy is meant to attract developers and spur RE investment.

The UK has also increased the maximum bid price for other renewable energy technologies. Geothermal projects will get 32 percent more at £157/MWh from £119/MWh, solar projects will receive 30 percent higher rates of £61/MWh against £47/MWh and support for tidal projects will rise 29 percent to £261/MWh from £202/MWh. Since 2014, the country has awarded contracts for 30 GW of new renewable capacity across all technologies.

Britain's use of renewables has increased markedly over the last decade. Power from renewable sources accounted for 48 percent of the country's energy mix in the first quarter of this year, up from just six percent in the first quarter of 2010.

But wind is particularly important to the country. Britain has the world's second largest offshore wind market after China, and the UK is also home to the world's five largest operational offshore wind farms. The country aims to have 50 GW of offshore wind capacity by 2030, including up to 5 GW of floating offshore wind.

Industry players welcomed the government's new pricing policy. Dan McGrail, CEO of RenewableUK, the country's trade association for renewable power companies, said, "There is the potential for the government to attract a record level of private investment in offshore wind projects next year, with at least 10 projects likely to be eligible, able to power 8.5 million homes each year and reduce the UK's need for gas by 39 percent. The framework set out today is a significant step forward in securing this."

Emma Pinchbeck, CEO of EnergyUK's, the country's energy trade association of energy companies, said in a statement: "Offshore wind is the flagship technology for the UK in terms of meeting our net zero targets… So we very much welcome the government responding to the increased global competition and the economic challenges facing developers by showing more ambition and giving greater confidence to investors."