Managing Director of Eneco Wind U.K. Ltd., Guy Madgwick, has commented on the UK’s plans to change how it supports the development of offshore wind for Bloomberg. A day before Mr. Madgwick’s comments, officials realized that the plans to overhaul the power market were “unworkable”.
According to Eneco, the government’s plans to provide contracts for a certain amount of offshore wind will put the amount of investments under risk, while decreasing chances for the country to meet its energy targets.
A firm can get a full consent on a project and still not know if it got a contract, making suppliers uncertain whether it is actual firm order or not. The reason is that the proposals include offering of long-term contracts which guarantee prices to low- carbon generators, but do not state how many will be allocated.
Also, the government’s plans to use these “contracts for difference” (CFD) would also guarantee prices for nuclear power and carbon capture and storage.
Energy Secretary Ed Davey said: “The purpose of the CFD and strike price is to try to give predictability so that the cost of capital is lower.”
CCO of the Scottish Power explained that a big investment in offshore wind without a confirmed contract is “unacceptable”, while the government said that it will work with developers on enabling investment.
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Offshore WIND staff, July 25, 2012; Image: Eneco