A lack of flexibility in the government’s auctions for new wind farms is set to hit billpayers’ pockets, potentially by as much as £1.5 billion a year, researchers have warned.
Limits on the number of wind farms that can be contracted do not account for sustained high gas prices, meaning the public is bound to see more expensive electricity for longer, think tank the Energy & Climate Intelligence Unit said.
Though the government is poised to offer operators £190 million in September’s upcoming auction, “red tape” in the bidding process means the budget may not be fully spent.
Given last year’s auction budget wasn’t maxed out, the UK is missing out on savings which could be made by generating renewable energy locally.
“Every gigawatt of wind power not only means cheaper electricity and savings on bills, but reduced reliance on fossil fuels,” the analysis said.
Researchers noted that even in scenarios where wind power became more expensive, it would likely remain below wholesale costs, set to stick around £100/MWh for the foreseeable future.
“Government seems to be focussed on North Sea gas licences and tax breaks for oil companies that won’t bring down bills,” analyst Jess Ralston said.
“Stifling wind farms pushes up bills. [The] Treasury’s rules seem to be actively working against bringing them down.”
Research suggested that greater flexibility should be adopted in 2024’s contract for difference allocation rounds, in line with changes to the wider energy market.
This, it said, could prevent the UK from missing out on incentivising new wind farm development and ultimately facing higher bills for longer as a result.