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MP COLUMN: WHO HOLDS THE WHIP HAND ON ENERGY? NOT THE UK GOVERNMENT

It’s Tuesday the 12th of September and a major setback for the Just Transition to renewable energy jobs, for household energy prices and for the climate emergency we all face has just occurred in the House of Commons. This is because the results have come in revealing how many energy companies have bid into the UK’s Auction Round 5 for licences to build and operate renewable energy projects within the UK.

This process sees the UK Government set a ‘Strike Price’ at which a given form of energy will be bought from a generator. On any given day, when the actual market electricity price falls below this set price the energy generator is subsidised with the difference, but where the energy price rises above this set figure the generator pays back the difference to the public purse in effect delivering a guaranteed return on investment for generators.


This year, the Strike Price for Offshore Wind was set by the UK Government at £44 per Megawatt Hour. This seems a reasonable increase over last year’s Auction Round 4 Strike Price of £37.50 per Megawatt Hour, except that we live in deeply unreasonable times; with rising interest rates on borrowing and the crippling cost of the UK’s inflation crisis which is especially severe in construction.


The UK Government was warned by industry and opposition MPs that £44 would likely yield no bidders into Auction Round 5 for offshore wind - and this chorus included myself as the SNP’s new Energy Spokesperson. Offshore really matters to Angus, but regardless, all protest went unheeded and a predictable catastrophe unfolded where not a single bidder for Offshore Wind came forward despite multiple Scottish projects being ready to go.


This disaster for the UK mirrors precisely what happened in Spain with their last auction round. Forewarned should have meant forearmed. Ireland, seeing what happened in Spain reviewed their Strike Price to better reflect the prevailing economic conditions in an intelligent and consensual manner of government.


Not so here at Westminster where the UK Government’s arrogance and intransigence saw them dogmatically stick to £44 resulting in a zero return – a total humiliation for an incompetent regime. I have called on the department to convene an ‘Auction Round 5 Recovery Team’ to help het these deliverable and consented projects back online. I have as yet received no answer from UK ministers.

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