A spate of new offshore wind contracts announced on Tuesday will not be enough to help the UK meet its 2030 capacity target, UBS analysts have warned.
Britain’s government announced nine projects had been offered subsidies under the contract for difference regime on Tuesday, including planned wind farms from Orsted and Iberdrola’s ScottishPower.
Though these were part of a wider green energy auction hailed as “record-setting” by the energy department, UBS said the new offshore wind contracts would not be enough.
“We estimate [around] 31 gigawatts” of offshore wind capacity is now committed by March 2030, the bank wrote in a note after the UK’s sixth allocation round.
This means government targets for 55 gigawatts of offshore wind capacity by 2030 “cannot be met,” analysts added.
Were other proposed projects which did not receive subsidies, from the likes of the Crown Estate, approved, capacity by 2030 would unlikely stretch above 38 gigawatts, according to the bank.
Any prospect of decarbonising the entire UK power grid by 2030 would be unlikely as a result, though UBS noted the goal could be achieved “shortly after” ahead of a 2035 target.
Some 9.6 gigawatts worth of new green projects, including tidal and onshore technologies, were secured through the latest auction, which was slated to be enough for 11 million homes.
UBS added Orsted and Iberdrola had emerged as winners from the auction, with the former securing the highest £74 strike price for power from its Hornsea 4 wind farm.
This means the company will be granted subsidies to guarantee electricity is sold at the price, which UBS said would generate an internal rate of return of around 8%.