Friday, offshore wind became the UK's cheapest power source, in a technical sense.
The UK's third Contract for Difference (CfD) auction round allocated grid connection to projects with an approximate combined capacity of 5.5 GW for installation in 2023-'25 for prices as low as GBP 0.037 per kWh, including grid connection. That's less the UK's current spot price and the cheapest rate to date.
It should be noted, however, that onshore wind and solar have been generally prevented from entering as project bids.
These low prices inspire the British Labour Party to propose a massive expansion of offshore wind. The party's "People's Power Plan" seeks to install 41 GW of new offshore wind capacity by 2030, consisting of 37 new offshore wind farms averaging 1.1 GW, Labour announces.
Even though the UK's offshore wind model attracts the industry's praise for having reduced electricity prices, Labour is not interested in expanding the existing model. Quite the contrary, the party wants the state to become majority shareholder, owning a 51 percent stake in all projects.
"While UK’s offshore wind industry is still young, the UK has the opportunity to avoid replicating Britain’s experience with North Sea Oil and instead to learn from countries such as Norway and Sweden by owning what is already ours," writes Labour's Shadow Energy Minister Rebecca Long Bailey, referring to state-controlled oil companies such as Equinor.
At present, foreign firms – led by the similarly state-owned Danish utility Ørsted – own 93 percent of the UK's offshore wind farms, with 7 percent held by private domestic companies like SSE and Centrica. This has led to "frustrations", as such facilities create but few local benefits and jobs, Labour says.
Wants jobs back
The party points to instances such as SSE's Scottish offshore wind farm Beatrice, commissioned last year. The developer's extensive use of migrant labor was heavily criticized by labor unions, which also holds that the historically heavily industrialized local labor force along the coastal region of Fife is under heavy pressure. For instance, only a state intervention salvaged the BiFab shipyard, which also had big problems manufacturing Beatrice's jacket foundations.
"By taking a stake in offshore wind, we can collectively benefit from the profits, investing them back into our held-back coastal communities. That wind will turn into harbor fronts and libraries. Instead of jackets for wind farms located in Scotland being made in Indonesia, we’ll bring those jobs back to Fife," Labour writes in the statement.
Since the election of Jeremy Corbyn as Labour's leader, the party has increasingly advocated expanding state ownership of the energy sector. Recent days have seen nationalization plans for grid distribution aired, and there have even been mentions of drafted legislation to nationalize power and water utilities.
General election looms
Co-ownership of offshore wind farms would, according to Labour, provide a quite considerable profit, 20 percent of which could be channeled into a public fund – the People's Power Fund – which would make annual investments of GBP 600-1,020 million in peripheral coastal regions. The remaining 80 percent could be recycled into new renewable energy projects, the grid and well as climate change adaption.
The UK CfD support scheme entails that project owners receive payment up to the agreed tariff if the price is low. Conversely, the state takes compensation if prices are high. In a public co-ownership model, assuming the continuation of CfD's parameters, the state would make and take payments in both cases proportional to its proprietary claim.
In recent weeks, UK Prime Minister Boris Johnson has attempted to call a general election in October twice. Even though he has thus far not succeeded in doing so, the general election is expected to be held before the UK exits the EU in late October.
English Edit: Daniel Frank Christensen
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