Wales set to become 'green energy superpower' following record UK wind auction

Wales is set to benefit from increased energy security as two major new wind projects off the Welsh coast successfully secured contracts in a landmark national auction.

The UK Government has announced a record 8.4 gigawatts (GW) of offshore wind capacity following its latest renewable energy auction.

The results, which meet the specific capacity targets set by industry experts, include two significant projects off the Welsh coast, ending a ten-year period without new contracts for the region.

The auction includes Awel y Môr in the Irish Sea, the first Welsh project to secure a contract in more than a decade.

The Erebus project off the Pembrokeshire coast was also successful.

Erebus is notable for being one of only two projects in this round utilising floating offshore wind technology. Unlike traditional turbines fixed to the seabed, floating platforms allow for deployment in deeper waters such as the Celtic Sea. This project is supported by investment from the National Wealth Fund and Great British Energy.

The latest round of contracts comprises six new projects located off the coast in different areas of the United Kingdom.

While last year hit a record number of projects at nine, this year marks a record in the capacity of power bought.

Other projects include Berwick Bank in the North Sea – the first new Scottish project since 2022, and the largest planned offshore wind project in the world.

Two others are at Dogger Bank South, off the coast of Yorkshire, and Norfolk Vanguard, off the East Anglian coast – two of the largest offshore wind farms in the world.

The Department for Energy Security and Net Zero said the new projects would generate enough electricity to power 12 million homes, deliver around £22 billion in private investment, support 7,000 jobs and help the UK tackle the climate crisis.

The price for offshore wind was agreed at 40% lower than the cost of building and operating a new gas power plant, according to a key industry metric.

First Minister Eluned Morgan said: "I'm delighted that two Welsh offshore wind projects have secured contracts in the latest UK auction. This demonstrates how Wales is well placed to build on its existing capacity for renewable energy, to reap the benefits of these new projects bringing many high-quality jobs and wider economic benefits to our economy.

"The floating offshore project off the coast of Pembrokeshire will help kickstart the new floating offshore wind industry for Wales and, together with extending the fixed offshore wind generation in north Wales, will utilise the latest technology and help to reduce bills and boost our energy security."

Energy Secretary Ed Miliband said: “With these results, Britain is taking back control of our energy sovereignty.

“This is a historic win for those who want Britain to stand on our own two feet, controlling our own energy rather than depending on markets controlled by petrostates and dictators.”

Experts had said he would need to commission 8.4GW of new offshore wind capacity during the auction round to stay on track to meet the Government’s target of removing almost all fossil fuels from the UK’s electricity supply by 2030.

Matching this figure on Wednesday, Mr Miliband said the auction marked a “monumental step” towards Labour’s wider goal.

Because renewable projects can be expensive, developers bid to secure a guaranteed rate – or a strike price – they can charge for each megawatt hour (MWh) of power they generate in the coming years.

If the price of electricity on the open market dips below that, subsidies will top up payments to companies. If the price is higher, companies have to pay back the difference.

The Government has secured a strike price of £91 per MWh on average or just over £65 in the commonly used benchmark of 2012 prices.

In contrast, the Levelised Cost of Energy (LCOE) industry metric on Wednesday showed the cost of building and operating a new gas-fired power station at £147 per megawatt hour.

Mr Miliband wrote on X that the 40% lower strike price has disproved claims by right-wing detractors of clean power.

“Clean, homegrown power is the right choice to bring down bills for good, and this auction will create thousands of jobs throughout Britain,” he said.

Since the auctions started in 2015, offshore wind has boomed, with the price of developing projects falling and output soaring.

In 2015’s auction, 1GW of offshore wind contracts were agreed. By the fourth round in 2022 it was 7GW.

Over that period, the strike price dropped by almost 70% thanks to market confidence generated by government help and economies of scale.

The fifth round in 2023 saw no new offshore wind development contracts agreed after no companies submitted bids because the strike price was too low.

This marked a setback for the previous government, which had committed to having 50GW of offshore wind by 2050.

Previous auctions had announced secured capacity for various renewable technologies – including offshore and onshore wind, solar and tidal – but this year the process has been split up with only the results for offshore wind announced on Wednesday.

The Government secured a record 11GW of winning bids for various technologies in the 2022 auction, and 9.6GW last year.

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