By William Mathis (Bloomberg) –The U.K. is set to open the first contest in a decade intended to draw
as much as 20 billion pounds ($25 billion) of investment in offshore wind farms.
The move in a competitive auction for leases where developers can plant large-scale turbines at sea will bring at least 7 gigawatts of new power generation capacity to the U.K. grid and speed up a shift toward cleaner energy supplies.
Britain is pushing both to reduce fossil fuel emissions that cause climate change and to replace nuclear and coal plants that regulators say must close within the next few years. The government has estimated it may need 100 billion pounds of investment over a decade or more to upgrade its aging power networks.
“With the tremendous cost reduction that’s happened with offshore wind, the technology will have a key role to play in de-carbonizing the U.K. energy system,” said Huub den Rooijen, director of energy, minerals and infrastructure at the Crown Estate, which is conducting the auction.
Opening the Seabed
The Crown Estate, which manages the waters around England, Wales and Northern Ireland, will auction leases for offshore wind development in four areas. The announcement kicks off a process for developers to submit proposals for leasing rights to the areas that could lead to billions of pounds of investment. Building turbines at sea was once seen as niche within renewable energy, but after costs plunged in the past few years the technology is becoming more attractive to utilities.
The growth of offshore wind projects will likely push power prices down even further, which makes it more likely that subsidies will continue to be needed in future, according to Tom Harries, a wind analyst at BloombergNEF. While that could be good news for investors eager for stable returns, it makes it harder for wind to stand on its own in the power market.
“If the ultimate aim is to wean off subsidies,