Ready-to-build wind farm ‘loses out to speculative projects’ in clean power auction

A row has erupted over the government’s latest renewable energy subsidy round after one of Britain’s largest energy groups claimed that “shovel-ready” offshore wind projects were overlooked in favour of more speculative schemes that may struggle to meet the UK’s 2030 clean power target, if they are built at all.

Scottish Power said it had expected to secure a contract under Allocation Round 7 (AR7) of the government’s Contracts for Difference (CfD) scheme for its proposed £4 billion East Anglia One North offshore wind farm. The project, located off the Suffolk coast, has planning consent and could generate enough electricity to power up to 900,000 homes.

Instead, it lost out to six rival offshore wind schemes, five of which are being developed by RWE, including two projects that have yet to receive planning consent.

Keith Anderson, chief executive of Scottish Power, said the outcome raised concerns about whether the auction design is aligned with ministers’ ambition to deliver 95 per cent clean electricity generation by 2030.

“We had a literally shovel-ready project,” Anderson said. “We would have taken a final investment decision the day after being awarded the contract. Construction would have started immediately and the project would have been at full output before the end of 2030.”

By contrast, he argued, several successful bids were at an earlier stage of development. “[Some] didn’t have supply chains secured and won’t be built until probably 2031 or 2032. Two of the projects that won a contract don’t even have planning consent.”

The government altered the rules of AR7 to allow projects that had not yet secured full development consent to participate, broadening competition but, critics say, increasing delivery risk.

The CfD scheme guarantees renewable generators a fixed “strike price” for the electricity they produce, providing long-term revenue certainty in exchange for committing to deliver capacity at scale. Winning a CfD contract is typically a prerequisite for securing final investment and supply chain commitments.

Industry observers note that previous rounds have exposed the fragility of project economics when inflation surges or supply chains tighten. In 2023, Ørsted withdrew from its Hornsea 3 offshore wind project despite having secured a contract, citing sharply rising construction costs that rendered the agreed strike price commercially unviable.

Anderson warned that similar risks may now be embedded in AR7’s outcomes. “We have highlighted to the government that encouraging bids before projects are consented or before supply chains are locked in increases the risk that projects simply won’t get delivered.”

Scottish Power is now urging ministers to move swiftly on the next auction round, arguing that East Anglia One North could still contribute materially to the 2030 target if awarded a contract this year.

“We can still get that project built by 2030,” Anderson said. “But we need certainty.”

RWE rejected suggestions that its projects were overly speculative. A spokesperson said the company was “very well advanced” in securing consent for the two outstanding schemes and progressing supply chain negotiations across all its AR7 projects.

“Given RWE’s extensive experience in delivering offshore wind, subject to consent and timely grid connection, we are confident our AR7 projects will be delivered,” the company said.

Grid connection remains a significant variable. Even fully consented offshore wind projects face delays if transmission infrastructure is not available, a bottleneck that has become increasingly prominent as renewable capacity accelerates.

The Department for Energy Security and Net Zero defended the AR7 process, saying the auction “puts us firmly on track to take back control of our energy system by delivering clean, home-grown power by 2030.”

The dispute highlights a broader tension in the UK’s energy transition: whether policy should prioritise near-term certainty and construction-ready projects, or widen participation to maximise competition and long-term pipeline development.

With offshore wind central to the government’s decarbonisation strategy, and billions of pounds of capital at stake, the credibility of delivery timelines will now be closely watched by investors, supply chains and ministers alike.