Climate change effect whole world and in current War situation where many countries face difficulties to import raw materials e.g petroleum and LNG products,UK industry also face energy crises and to overcome this UK Ministers are being told that without an urgent revamp of government backing, Britain faces being left with no chance of achieving its vital climate crisis goals and losing its position as a global leader in offshore wind generation.
Senior energy industry insiders warned the Observer that the abrupt termination of one of the nation’s largest offshore windfarm projects last month could indicate a “tipping point” in the development of new sites unless ministers step in.
They caution that a large number of new projects, on which Britain is depending to reach important climate commitments, may also cease to be economically viable under the current system. Although the industry has experienced significant pressures on prices, it warns that the government has not made any adjustments to the programme that ensures the price it pays for electricity.
“One insider in the business said that, if the government doesn’t take action, “there is a very real risk that, come September, just before party conferences, the story won’t just be about getting rid of the “green garbage” — it will also be about failing to deliver on the projects they’ve already stated they wanted.”
Construction costs for offshore wind developers have skyrocketed as inflation has been rampant. The government has also been working to keep electricity costs down through the contract for difference (CfD) programme, which gives investors assurance over new projects.
The government set a maximum price of £44 per kilowatt hour for the most recent bidding cycle, which ends in September, based on 2012 prices. – in previous tenor that also happen before many of the inflationary pressures hit.
The decision of Swedish energy provider Vattenfall to halt construction on the multibillion-pound Norfolk Boreas windfarm, intended to power the equivalent of 1.5 million British homes, has raised concerns about the mismatch. The initiative, it claimed, was no longer profitable. During a meeting on Downing Street last week, Grant Shapps, the energy secretary, was questioned over the matter.
To meet government climate targets, offshore wind is essential. It is committed to attaining net zero by 2050 and de-carbonizing the energy grid by 2035. By 2030, offshore wind power is expected to nearly quadruple, rising from 14 gigawatts to 50 gigawatts.
The UK offshore wind business is at a turning moment, according to James Matix, head of offshore wind at the Carbon Trust think tank. Currently, the maximum prices are too low. Vattenfall withdrew from the Norfolk Boreas wind farm last month. If decisive and immediate action is not taken, this could be the first of many.”
Adam Berman, a deputy director of Renewable Energy Britian, also the spokesperson of trade association for the energy industry, said: “let’s make its simple, if we have any chance of reaching the ambitious targets that the government has set in its future plans, we cannot afford more major projects to delay or to stop altogether.”
“We definitely run the risk of under-delivering,” he continued, “if we fail to add this issue in our first place and discuss its financially sustainable framework. We run the danger of the first CfD round failing to secure a significant offshore wind project.
The maximum price of offshore wind energy would still be low even with a slight increase, according to Ana Musat, executive director of policy at Renewable. She described the situation as “a perfect storm of factors changing, challenging economic conditions, and still having this really narrow focus on driving down prices.”
In an effort to allay worries, Shapps last week raised the subsidy pot for new renewables projects by £22 million.
Although the increase was “at least a step in the right direction,” said Tom Glover, UK country head for the renewable energy business RWE, “it seems unlikely that the additional funding will materially change the dial on procurement volumes.” It is crucial that the CfD process makes the most of every chance to install clean, reasonably priced, and dependable green energy given the UK’s ambitious renewable energy ambitions.
This past weekend, officials gave warnings that the government might step in. According to a spokeswoman for the Department for Energy Security and Net Zero, “The contracts for difference scheme, which has helped secure this significant advancement in offshore wind, is specially designed to protect generators against price fluctuations and current inflation wave, and compares favorably to other international schemes.”
They continued, “The switch to annual auctions was made in response to industry requests and is expected to support additional investment and boost developer confidence in the area every year. However, Ministry are well aware that the sector faces critical issues on the supply chain not just in the Britain but also in other European countries, and we are paying attention to their worries.