Offshore Energies UK has responded to the news that the Department for Energy Security & Net Zero (DESNZ) has increased the strike price caps and extended the duration for wind technologies in the upcoming Allocation Round 7 (AR7) Contracts for Difference (CfD) round.
The government has designed CfDs to encourage investment in renewable energy projects, particularly offshore wind farms. It works by providing developers with a guaranteed ‘strike price’ for the electricity they create. The mechanism helps to stabilise revenues for renewable energy projects and reduce the risk associated with fluctuating wholesale electricity prices.
Administrative Strike Prices (ASPs) have increased by 10% for fixed and floating offshore wind compared to last year’s AR6 auction. ASPs represent the maximum price per MWh price for generating electricity – known as the strike price – that a project of a particular technology type can receive.
OEUK’s Wind and Renewables Manager, Thibaut Cheret, said:
'OEUK fully supports the growth of offshore wind and the outcome of this allocation round will determine the UK’s ability to meet the government’s Clean Power 2030 targets. We have said it must raise at least 8.4 GW to help make these goals achievable.
'It’s understandable that strike prices are higher - reflecting inflation and the need for developers to make projects viable. However, as a nation we need to focus relentlessly on competitiveness and drive down inflation. To make our energy future affordable, we need tailored policies that balance investor confidence with long-term cost reductions for consumers and for businesses.
'As these contracts will be funded by consumers’ bills, the government must ensure they benefit the UK’s critical supply chain to enable it to scale up and deliver affordable energy while safeguarding jobs and long-term economic value.'
OEUK’s Wind Insight report sets out the practical steps industry and government can take to make offshore wind a UK success story that boosts economic growth. You can download it for free here .
Source: OEUK
