The UK's government raised the amount of money to offer wind power developers in the next auction by 50% to 1.5 billion pounds, which is equal to around $2 billion.
The move follows calls from the wind power industry that they need higher guaranteed prices for their electricity in order to invest in more capacity. The industry has been plagued by higher material costs and higher borrowing costs as well, because of higher interest rates.
The Labour government's biggest bet is on offshore wind-it is allocating over two-thirds of the total renewables budget this year to that segment, or 1.1 billion pounds ($1.4 billion). The remainder would be spent on onshore wind and solar, and on emerging technology such as tidal power and floating offshore wind.
Earlier this month, the chairman of RWE's UK operations told the FT that Keir Starmer's government needed to boost its budget for wind power significantly if it wanted to hit its own capacity installation target.
"We would urge them to increase [the budget] significantly and ensure they're getting all the advice of all the relevant experts to work out how to do that," Tom Glover said, warning that if the government failed to do that, it risked falling short by more than half of planned additions.
With the bigger budget, the government will be able to subsidize more wind and solar projects, possibly moving closer to hitting its capacity targets as part of its transition pledges during the pre-election campaign.
"This will restore the UK as a global leader for green technologies and deliver the infrastructure we need to boost our energy independence, protect billpayers, and become a clean energy superpower," Energy Secretary Ed Miliband said, as quoted by Reuters.
Germany had a very similar subsidy system for wind and solar until recently. Because of increasingly frequent negative electricity prices resulting from excess wind and solar generation, the government in Berlin decided to stop paying the minimum guaranteed price for these generators whenever prices swung below zero.
By Irina Slav for Oilprice.com
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