{"id":409943,"date":"2026-01-15T02:15:12","date_gmt":"2026-01-15T02:15:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/409943\/"},"modified":"2026-01-15T02:15:12","modified_gmt":"2026-01-15T02:15:12","slug":"labour-faces-risks-on-energy-despite-record-wind-power-auction-nils-pratley","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/409943\/","title":{"rendered":"Labour faces risks on energy despite \u2018record\u2019 wind power auction | Nils Pratley"},"content":{"rendered":"

The government has defied gloomy price expectations for its latest auction for offshore wind capacity. The worry a few months ago was that bill payers would be forced to pay more than \u00a3100 a megawatt hour (MWh) via contracts that give developers guaranteed prices for their electricity output. In the event, winning projects landed at roughly \u00a391\/MWh<\/a>.<\/p>\n

Cue some forgivable crowing from Ed Miliband, the energy secretary. \u201cA monumental step towards clean power by 2030,\u201d he declared. Officials pointed to calculations by the energy consultants Aurora and Baringa that \u00a394\/MWh would have been a \u201ccost-neutral\u201d outcome for consumers even though today\u2019s wholesale price, usually set by gas generation, is about \u00a381\/MWh (the analysts\u2019 reasoning is that using less gas lowers the wholesale price, offsetting the cost of the subsidies for new windfarms).<\/p>\n

But let\u2019s not get carried away. Yes, this auction was Europe\u2019s \u201cbiggest ever\u201d in commissioning 8.4GW of capacity in one go \u2013 and it again proved the virtue of competitive tension in the bidding process. But it also demonstrated two hard truths about offshore wind and the wider push towards clean power.<\/p>\n

First, the days when offshore wind got cheaper every year are over. The last auction at the end of 2024 bagged capacity at \u00a382\/MWh but those contracts were for 15 years. Miliband\u2019s switch to 20-year contracts this time probably knocked \u00a35\/MWh off headline numbers, so a like-for-like comparison might score this year\u2019s outcome at closer to \u00a396\/MWh. That equates to inflation of 17%. We are a very long way from the hopeful days of 2022 when offshore wind was still tumbling in price. Higher borrowing rates and tighter supply chains have changed the arithmetic.<\/p>\n

The rollout of offshore wind at these prices will not knock squillions off the price of electricity<\/p>\n

The second point flows from the first: the rollout of offshore wind at these prices will not knock squillions off the price of electricity. Any downward pressure on bills cannot be enormous when we\u2019re talking about the difference between \u00a391 and a theoretically neutral price of \u00a394. Yes, more renewables offer protection against spikes in the price of gas. But, remember, Wednesday\u2019s inflation-linked prices are being locked in for 20 years in a system that already produces some of the highest electricity prices in the developed world.<\/p>\n

Onshore wind and solar, where auction results are due in fortnight, should come in cheaper. But offshore, with its greater generating capacities, is the renewables workhorse. The consensus among energy analysts is that \u201cwhole system\u201d savings from a renewables- and nuclear-heavy system will only start to appear sometime about 2040.<\/p>\n

None of which should be read as an argument against offshore wind. Something has to be built because several nuclear power stations will soon close, and a third of the gas power plant fleet is nearing the end of its life. As Miliband pointed out<\/a>, new gas plants aren\u2019t cheap either, given bottlenecks in the supply of turbines \u2013 call it \u00a3147MW\/h for building and operating one, says the energy department.<\/p>\n

Instead, this auction has really demonstrated that we are deep in the world of trade-offs in energy transition. There are no more easy 2022-style pickings. Is it, for example, vital to hit Miliband\u2019s target for clean power, defined as 95% generation from low-carbon sources, by 2030? Of course not. The deadline was always artificial.<\/p>\n

As it is, the government is probably on course for 85%-90% after Wednesday\u2019s auction. Why bother with the last bit if, as seems to be the case, the law of diminishing returns is setting in? Electricity also needs to be cheaper (or, at least, not even more expensive) to encourage the take-up of electric vehicles, heat pumps and so on.<\/p>\n

Instead, the most pressing questions in energy-land are different. Is it possible to take a chunk out of the towering \u00a380bn bill for rewiring the electricity grid? If 90% low-carbon is deemed enough, possibly, as retail energy suppliers have argued<\/a>. Will new transmission cables arrive before the new windfarms are built? That is critical to keep a lid on \u201cconstraint\u201d payments that run on to billions of pounds.<\/p>\n

And what is the government\u2019s plan for gas? It barely talks about the backup system for cold, windless winter days that will be retained. That is despite the scariest report out of the energy department in recent months being the one that warned of an \u201cemerging risk\u201d of running out of gas supplies by 2030<\/a> if an important piece of kit, such as a pipeline from Norway or an LNG terminal, were out of action.<\/p>\n

Encouragingly, there are hints of greater pragmatism. Chris Stark, the head of \u201cmission control\u201d unit in the energy department, said the 2030 target for offshore wind is \u201con track\u201d but it is \u201cnot essential\u201d to hit it given the strong result in the latest auction; there is scope to be \u201cchoosy\u201d on projects in future. Good.<\/p>\n

For the next step, Miliband could say out loud what everybody already knows: the 2030 generation deadline can be ditched because 90% clean power is fine and bigger energy challenges lie elsewhere.<\/p>\n","protected":false},"excerpt":{"rendered":"The government has defied gloomy price expectations for its latest auction for offshore wind capacity. The worry a…\n","protected":false},"author":2,"featured_media":409944,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[49,48,295,66],"class_list":{"0":"post-409943","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-environment","8":"tag-ca","9":"tag-canada","10":"tag-environment","11":"tag-science"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/409943","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=409943"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/409943\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/409944"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=409943"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=409943"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=409943"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}