UK Government accused of setting back climate action as wind project dealt major blow

The UK Government has been accused of setting back climate action following the announcement that Wales’ flagship offshore wind project had not been successful in the renewable energy auction.

On Friday (September 8), the Department for Energy Security and Net Zero announced the results of the UK’s fifth Contracts for Difference (CfD) auction round to incentivise the build of renewable energy projects and deliver net zero targets.

There were no floating offshore wind winners in this year’s auction, including Erebus, Wales’ first planned floating windfarm off Pembrokeshire.

The annual renewables auction aims to encourage private sector investment in various power sources through “contracts for difference” (CfDs).

However, the auction struggled to attract bidders due to the government’s overly low maximum price for generators, which failed to account for the increasing manufacturing and installation costs of turbines.

Plaid Cymru’s environment spokesperson in Westminster, Ben Lake MP, warned that the Conservative UK Government is “setting back our climate efforts” after having failed to secure “an invaluable opportunity that could boost the economy of southwest Wales”.

Erebus, the flagship offshore windfarm due to be commissioned in 2026, would have seen Wales kick start the floating offshore wind industry which would have delivered jobs and opportunities for local people in Pembrokeshire and southwest Wales more widely.

A successful auction contract from the UK Government was the final hurdle needed for the project to unlock the private investment to proceed.

Ben Lake echoed calls by RenewableUK Cymru on the UK Government to reform the CfD framework, reflecting the rising costs of manufacturing, to ensure it can unlock private investment in Welsh renewable energy projects.

“Warnings”

Ben Lake MP said: “Today’s news is deeply disappointing. The Erebus project is the first of its kind in Wales, and would have paved the way for further offshore wind developments, helped to lower energy bills, and make an important contribution to the economy of southwest Wales.

“Despite repeated warnings from the industry, the UK Government failed to factor rising costs into the auction process, making this flagship project less competitive. The Irish Government, on the other hand, ran their auction in May with a framework that recognised current supply chain costs and secured investment in four offshore wind farms. Wales is losing to Ireland due to the UK Government’s poor planning.

“The UK Government is sadly not only setting back our climate efforts but also failing to secure an invaluable opportunity that could boost the economy of southwest Wales. To avoid more disappointments in future, the UK Government must urgently reform their Contract for Difference framework so that Welsh renewable projects can compete for the private investment sorely need.

“Plaid Cymru also call again for the devolution of the management of the Crown Estate to Wales. This would help the Welsh Government to create a ‘Made in Wales’ offshore wind strategy that won’t be undermined by the UK Government’s failures.”

RenewableUK Cymru said they were “incredibly disappointed” to learn there are no floating offshore wind winners this year.

RenewableUK Cymru’s Director Jess Hooper said: “As Wales’ first floating offshore wind project, Erebus is entirely dependent on this form of revenue support to succeed, and the success of Erebus is critically important not only to Wales and the wider South West region, but also for the UK Government’s own floating offshore wind targets.

“This result will now delay investment decisions for developers, supply chain companies, ports and infrastructure, all with knock-on effects.

“Despite the industry’s clear warnings, the UK Government has not taken inflationary costs and supply chain squeeze into account in this latest auction, focusing solely on competition through cost reduction.

“This is a huge wake-up call that if we want to deliver on our targets in this decade of delivery we need to see considerable reforms to the CfD auction design and industrial strategy to support its development and deployment.”