Leading offshore wind developers have halted construction on various farm projects due to supply chain bottlenecks and rising interest rates. Alongside this, the UK’s targets may become difficult without better incentives. According to Vattenfall's wind business head, the incentives offered no longer reflected the current market conditions.

“Higher inflation and capital costs are affecting the entire energy sector, but the geopolitical situation has made offshore wind and its supply chain particularly vulnerable," states Vattenfall President and CEO.

‍

But it’s not all bad news, the UK government has increased the maximum strike price for offshore wind projects in the next Contracts for Difference (CfD) auction by 66% for fixed-bottom and by 52% for floating wind projects. Going up originally from 44/MWh to 73/MWh (GBP) and from GBP 116/MWh to GBP 176/MWh ahead of Allocation Round 6 next year.

The government states the increases have been made after “an extensive review of the latest evidence, including the impact of global events on supply chains…”

”This critical update to the scheme’s design provides further clarity and confidence to the offshore wind sector and ensures the scheme remains competitive for renewable developers investing in new low carbon technologies.”  

‍

Amidst the increase, they have also announced that offshore wind will receive a separate funding allocation in AR6. Promoting healthy competition among a robust pipeline of projects, to help the UK achieve its ambitious target of up to 50 GW of offshore wind by 2030, which includes up to 5 GW of floating offshore wind.

The Contracts for Difference (CfD) scheme guarantees a fixed price for electricity generated by renewable energy projects. The United Kingdom is currently leading the world with its five largest operational offshore wind farm projects. Moreover, the country has made significant progress in generating electricity from renewable sources, which increased from six percent in the first quarter of 2010 to 48 percent in the first quarter of this year.

To conclude, despite the challenges faced by the industry, The government's firm focus on sustainability for offshore projects has no doubt paved the way for a brighter future of wind power. Here at Rix Shipping, we’re actively monitoring the latest industry developments and shifts, ensuring that our service offering reflects the needs and requirements of the ever-changing industry.

Make sure you’re following the latest news with through our blogs.