The UK’s largest electricity producer has warned the UK Government could lose the necessary momentum needed to secure sufficient offshore wind projects this year due to challenges concerning internal modelling and technology. RWE suggested ministers risked overestimating the costs of offshore power to bill payers, resulting in possibly fewer granted contracts required to kickstart projects.

The German business, responsible for nearly 15% of UK electricity production, is currently developing offshore wind projects in the UK but wants industry officials to reconsider their strategy before the next auction round. RWE believes there is a danger of not deploying as much renewable energy as economically possible.

Tom Glover, the UK chair for RWE, explains that offshore wind is due to play a critical part in the UK’s goal to achieve net zero. The Government hopes to have 50GW installed by 2030, so the next auction round for government contracts is essential for the industry after an unsuccessful round in 2023.

To improve the conditions, the government has increased the maximum price that new wind farms could be paid for each MW/hr produced within the subsidy scheme. Ministers have yet to release forecasts for wholesale power prices and wind farms’ performance, which will help calculate the cost to billpayers and consequently, the number of wind farms that can be financially supported.

RWE warned that the forecasts applied in the previous auction round for these subsidy contracts didn’t correspond with market assumptions, with wholesale prices set too low and performance too high. Adam Berman, the deputy director of Energy UK, highlighted the need to restructure contract designs. Berman explains that we don’t have that many auction rounds to play with, so the government must recognise the expectations on power prices.

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