Offshore wind auction to attract £3.4bn of private investment, Government says

The Government said its flagship renewable energy auction will attract £3.4 billion of private investment to build factories, ports and domestic supply chains across the UK.

The latest round of contracts, announced on Wednesday, secured a record 8.4GW of offshore wind power – the amount experts have said was needed this year to keep the Government on track to meet its “clean power” by 2030 pledge.

Building and operating the new wind farm projects across the country will also attract billions in private investment, officials said on Thursday.

They said public money will be invested through the Government’s new clean industry bonus, which was introduced as part of this auction to provide financial rewards for developers investing in areas such as traditional oil and gas communities, ex-industrial areas or ports and coastal towns.

Every £1 of this public money will leverage £17 from industry, the Government said.

This could mean the £204 million that ministers say they will put into offshore wind following the auction will leverage £3.4 billion of private investment into British manufacturing, factories and ports.

Of this, up to £1.1 billion will be invested in Scotland to support ports such as Nigg and Aberdeen as well as Scottish factories, in addition to up to 2,400 clean energy jobs, officials added.

Prime Minister Sir Keir Starmer said: “We promised to take back control of our energy with clean, homegrown power – and today we’re delivering in a way that brings good industrial jobs for Scotland and the rest of the country.

“Billions in investment will flow into hard-working industrial communities to build clean energy supply chains in Britain.

“This is how we revitalise our proud industrial heartlands and secure our energy future and bring bills down for the long-term.”

The Department for Energy Security and Net Zero (DESNZ) said the new offshore wind projects will generate enough electricity to power 12 million homes, deliver around £22 billion in private investment, support 7,000 jobs and help the UK tackle the climate crisis.

It comes as part of the Government’s wider ambitions to deliver 400,000 clean energy jobs by 2030.

Energy Secretary Ed Miliband said: “Our clean energy mission is creating thousands of good jobs for working people in their home town, bringing transformational opportunities for Britain and reversing decades of industrial decline.

“This investment in clean, homegrown power will be felt for decades, powering Scotland’s future and backing the proud industrial base of our country.”

The six new wind farm projects include Berwick Bank, in the North Sea – the largest planned offshore wind project in the world – as well as projects at Dogger Bank South off the coast of Yorkshire, and Awel Y Mor in the Irish Sea.

Because renewable projects can be expensive, developers bid to secure a guaranteed rate – or a strike price – they can charge for each megawatt hour (MWh) of power they generate.

The cost of offshore wind, seen as a key part of delivering the 2030 target, has risen in the last few years – after years of falling prices and booming development.

With this latest auction, the Government has secured a strike price of £91 per MWh on average or just over £65 in the commonly used benchmark of 2012 prices.

That is significantly higher than the record low price of £37.35 – in 2012 prices – secured in the 2022 auction, although projects later faltered because of rising costs and no contracts were secured the following year as offered prices were too low to attract bids.

The Government pointed to analysis it published on Wednesday, using the levelised cost of energy (LCOE) industry metric, which put the cost of building and operating a new gas-fired power station at £147 per megawatt hour.

Officials also highlighted findings by Aurora Energy Research that the Government can achieve its offshore wind target of 43GW at no additional cost to the billpayer at an auction strike price up to £94 per MWh.

But shadow energy secretary Claire Coutinho criticised the “botched” auction on Wednesday, arguing that it has delivered the highest prices for offshore wind power in a decade and that Labour have “underplayed the true cost of wind on people’s bills”.