The Labour government is set to significantly increase funding for clean energy projects, announcing a record £1.5 billion for its summer subsidy auction—a 50% increase over previous figures.
This boost aims to revitalise the UK’s clean energy sector after the previous administration failed to secure any new offshore wind contracts in 2023 and did not lift restrictions on onshore wind. The new funding total is seven times last year’s budget, signalling a strong commitment to green energy.
The government believes that expanding the auction will create high-quality jobs in industrial and coastal communities and help protect households from fossil fuel price spikes by boosting clean energy production.
Energy Secretary Ed Miliband commented, “Last year’s auction was a disaster, securing zero offshore wind projects and delaying our shift from costly fossil fuels to energy independence. We are now backing the industry to build in Britain with the largest auction budget yet, restoring the UK as a global leader in green technologies and providing the infrastructure needed to boost energy independence, protect bill payers, and become a clean energy superpower.”
This summer, offshore wind projects will vie for up to £1.1 billion in funding, up from £800 million. Analysts at Jefferies estimate this could generate 6-7 gigawatts of offshore wind capacity, enough to power nearly 5 million homes.
Onshore wind and solar projects will share £185 million, a £65 million increase from previous figures. Additionally, funding for emerging clean energy technologies, such as floating offshore wind and tidal power, will more than double to £270 million.
Miliband’s announcement follows warnings from senior executives that Labour’s ambitious clean energy targets might already be at risk. The party pledged to double onshore wind, triple solar power, and quadruple offshore wind capacity by 2030.
Damien Zachlod, managing director of EnBW’s UK arm, highlighted the critical importance of the next 18 to 24 months for meeting the government’s 2030 offshore wind targets. Keith Anderson, CEO of Scottish Power, welcomed the increased budget, calling it a crucial investment signal to make Britain a clean energy superpower and drive economic growth.
The contracts offered guarantee set prices for each unit of clean electricity generated, funded through energy bills. However, as renewable energy costs often fall below market prices, these contracts typically result in payments back to bill payers.
The reset comes amid a record-breaking year for renewable energy generation in the UK. Official data shows that renewables provided 46.4% of the country’s electricity in 2023, surpassing fossil fuels, which accounted for 36.7%.
Wind power was the leading source of clean energy, generating 28.1% of the UK’s electricity, up from 24.7% in 2022. Offshore wind contributed a record 17%, while onshore wind accounted for 11.2% of electricity production.