What Happened at The Government's 'Energy Security Disaster' Auction?

So far, the government’s willingness to embrace potential solutions has been inconsistent. The Conservative party has frequently renounced the appeal of solar farms, claiming that these installations will ruin British farmland, in spite of the fact that agrivoltaics offer a promising new practice for farmers. As the promise of extensive solar farms fizzled out, the government looked instead to bolster the country’s nuclear power capacity – a misguided move backwards, given the environmental and health concerns nuclear power raises. While a step toward nuclear power does represent a step away from fossil fuels, it is comparable to a step sideways – inertia disguised as a breakthrough. 

For those who saw through the shaky plans for green recovery, offshore wind represented another promising alternative. If the Conservative party remains opposed to devoting more UK farmland to solar farms, then these offshore wind farms are the next best thing in terms of scope and scale. But a recent auction flop dubbed the ‘biggest disaster’ for clean energy and renewability in years has set the UK back further still. 

Here’s what you need to know. 

What happened? 

September saw the latest CfD (Contract for Difference) auction take place, at which bidders put forth prospective contracts for sustainability initiatives in the hope of receiving financial backing from the government. These auctions offer the opportunity to secure 15-year contracts that further the advancement of low-carbon energy initiatives.

So far, these auctions have had a tangible impact on the UK’s capacity for renewable energy. On-shore and off-shore projects and solar installations now account for more than a quarter of UK energy, which is excellent progress – although, still, we are waiting for a conclusive end to the ‘will they/won’t they’ relationship the Conservatives have with carbon neutrality. 

This year, the expectation was that the government would demonstrate a clear, decisive commitment to offshore wind projects, given their vocal opposition to solar farms. 

Unfortunately, that wasn’t the case. The September auction came and went – and, with it, any promise of a wind farm rollout in the near future. 

Why has the government’s interest in wind blown over?

Shortly before the September Contract for Difference, the leading candidates for securing a 15-year offshore wind farm contract warned the government that high inflation would inevitably raise the projected costs. This wasn’t a small shift, either. Some companies estimated that costs had grown by around 40%, which rendered the government’s opening auction price unfeasibly low. Until supply chains are given the opportunity to recover, no bidder would be capable of meeting the government’s expectations. 

As a result, none of the companies that were anticipated to secure a contract (which, together, offered some 5 gigawatts of clean energy to send into the national grid, which would have saved billpayers around £2 billion each year) ended up bidding in the auction. 

This is, of course, a multifaceted issue for the UK. While a missed opportunity to bolster the UK’s renewable energy capacity is, in and of itself, a national disaster given the severity of the climate catastrophe. But, in an age of cripplingly high energy bills, a cost-of-living crisis, greed from those who hold a monopoly over the fossil fuel industry, disrupted supply chains as a result of war, and record levels of inflation coming down onto the shoulders of the public, the loss of a promising alternative represents a real failure on the part of policymakers. 

The decision has also put a roadblock on a chance to create hundreds of new jobs within the renewable energy sector – another element that is sorely needed for a strong, sustainable economic recovery. 

There were plenty of warnings – and plenty of opportunities to ensure that the door was not closed in the faces of these bidders. 

Will the government re-embrace solar farms? 

Solar has been consistently named the cheapest source of energy. Instead of constructing massive solar farms off the British coastline, these panels can be erected quickly and cost-efficiently, without compromising the viability of the farmland. 

The trouble remains with the Conservative government. While hope remained that Liz Truss’s distaste for solar farms was a personal one, Sunak appeared to echo her sentiments in early October. The Guardian reported on his plans to impose stronger restrictions on solar panels being installed on British farmland. 

This is another big step back, and a sign that the government’s green resolve is quickly weakening. With wind farms out of the equation until inflation returns to normal (if that ever happens) and solar being marginalised by the very policymakers who should be scrambling to ensure it is responsible for the bulk of energy being exported onto the grid.

There is very little substance to their argument against solar energy. Instead, they have consistently managed to evade commitment to solar as a leading technology for carbon neutrality through their distaste for the panels’ appearance, particularly when they are installed on quintessentially British farmland. Fortunately, these views are predominantly limited to the party itself. A recent survey conducted by Solar Power Portal found that 88% of people surveyed would be happy, fairly happy, or ambivalent toward a solar farm built in their area. 

Of course, the trouble lies in the fact that the distaste lies with the policymakers. Labour has already reaffirmed their interest in solar, promising to treble solar capacity within their first term. A change in the guard could be the UK’s last hope of growing its solar capabilities and freeing itself from the global fossil fuel marketplace once and for all.  

Will inflation hold back private solar installations too? 

To a certain extent, yes – many homes and businesses are feeling the pinch and, as a result, larger-scale projects for reducing carbon emissions are being forced onto the backburner. Inflation must continue to drop and reduce its chokehold on the public before many feel that they are in the right position to invest in their own green futures. 

But, at the same time, the cost-of-living crisis has demonstrated quite how precarious a reliance on fossil fuels makes us. We are vulnerable not only to shifting market prices but also to the greed levied on consumer prices. In the first three months of 2023, for instance, BP saw profits of around $5 billion as thousands of UK households were forced into energy poverty. While supply chain issues were responsible for some of the concerns faced between the winter of 2022 and 2023, it is impossible for oil and gas companies to suggest that these issues were responsible for their record profits. 

As the cost-of-living crisis begins to show signs of easing, it’s inevitable that more people will be looking for ways to ensure that they are not at the mercy of energy suppliers in the future. While issues across various supply chains (largely precipitated by the energy crisis) have driven prices up in almost every industry, solar panels continue to grow more affordable than they were just a few years ago. The last decade has seen the average cost of a domestic system fall by around 60% as more research into the technology makes these systems more accessible. Improvements to battery life (largely thanks to the arrival of the lithium-ion battery) mean that these systems are far more efficient at powering a home or business throughout the day and night. 

So, while inflation has doubtless caused many people to press pause on their plans for a greener home or business, the sector is far from slowing down.

This latest step back from progress made by the Conservative government is yet another nail in the coffin. We often state that, in spite of the setbacks, there is still time for positive change and a real, genuine shot at a carbon-neutral future for the UK, and that remains the case here. However, with solar and wind representing the two most cost-effective sustainable energy sources, and Sunak once again reaffirming the party’s disinterest in investing anywhere near enough time, interest, or money into these solutions, things are beginning to look very bleak. Nuclear is not a substitute for healthy, infinitely renewable sources of energy, and neither is it a solution to the cost-of-living crisis that threatens to bear down on yet another cold winter for thousands of UK homes and businesses.