10.2 C
New York
Sunday, December 3, 2023

After failed tender, London agrees to increase the price of offshore wind energy

This is a measure that was expected in the sector of renewable energies. The British government announced on Thursday, November 16, an increase in the ceiling price of electricity in offshore wind power, in order to boost the attractiveness of a crucial sector for the country’s energy transition. As a reminder, England suffered a resounding failure in September during its last call for tenders.

The government has increased the maximum price that offshore wind and other renewable energy projects can receive » for the electricity they produce, announced the British executive in a press release, whose objective is to boost their profitability, and therefore their attractiveness for energy companies.

In detail, this ceiling price was increased by 66% for offshore wind projects and by 52% for floating parks, before a new call for tenders planned for next year, the executive said. The government also increased the maximum prices on Thursday for other technologies, including geothermal (+32%), solar (+30%) and tidal energy (+29%).

The increase in the ceiling is “ a smart move and the only way to resurrect the UK’s ailing offshore wind industry », Reacted Thursday Doug Parr, a Greenpeace official, in a press release. Even with this increased price, “ offshore wind will remain much cheaper than gas » and will constitute “ a real way to reduce bills » for households but also “to strengthen our energy security and reduce emissions » of the country, he added.

Difficulties in its wind sector deepen Siemens Energy’s losses

A difficult setback

The British government’s last call for tenders therefore ended in failure in September for the award of new offshore wind fields: no file for this type of project appeared in the contracts allocated to renewable energies. Energy companies claimed that the ceiling price was insufficient to make these projects profitable, with the increase in costs induced by the global economic context.

A “Humiliating policy failure for the government, which ignored industry warnings that inflation had significantly increased costs for offshore wind developers “, according to Bob Ward, of the Grantham Research Institute for Climate Change and the Environment, at the London School of Economics.

The Swedish electricity group Vattenfall also announced in July that it was stopping the development of a wind project off the coast of the United Kingdom, one of the largest in the country. This announcement, then the failure of the call for tenders, dealt a blow to British ambitions in renewables, adding to a plethora of new oil and gas exploration permits, while the war in Ukraine has put energy security back at the heart of London’s priorities.

Offshore wind: the EU must increase the rate of deployment by 10 to meet its objectives

A turbulent sector throughout Europe

However, England is not the only one experiencing difficulties with wind power. In the wake of the war in Ukraine, the price of materials used in these projects such as steel, aluminum and copper has soared and considerably increased their cost. Wind power also finds itself weighed down by soaring interest rates which complicate financing and by tensions over the supply of key components (nacelles, cables, turbines, etc.) with Chinese manufacturers in ambush. At a time when the sector must invest massively in Europe to meet expected demand and accelerate the energy transition.

In the offshore, several projects, won before costs soared, have been suspended, such as the Trollvind of the Norwegian Equinor. Ditto for the Swedish Vattenfall and its Norfolk Boreas (1.4 GW) in the British North Sea, when the disappointments of the Danish Orsted in its American projects caused it to suffer depreciation and a stock market collapse.

For its part, China is still little present in the offshore sector, but it has already supplied the first Italian fleet in 2022. “ The future of our carbon-free technology industry must be built in Europe », had therefore warned the President of the European Commission Ursula von der Leyen, promising future measures for wind power in mid-September. Europe, a pioneer, must multiply by ten its current rate of deployment of offshore wind turbines to meet the objective set for 2030, indicated in October the European Commission, which wishes to further facilitate authorization procedures and appeals. of project offers.

At the end of 2022, the Twenty-Seven totaled 16.3 gigawatts of offshore wind capacity, while they have committed to collectively reaching 111 GW by the end of the decade. This means that they should now install almost 12 GW per year… or ten times more than the 1.2 GW built last year, explained the European executive.

(With AFP)