The Labour government is set to significantly increase funding for clean energy projects, announcing a record £1.5bn for the summer subsidy auction – a 50% increase on previous figures.
The push is aimed at revitalising the UK’s clean energy sector after the previous administration failed to secure any new offshore wind contracts in 2023 and failed to lift restrictions on onshore wind. The new funding totals 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 families from rising fossil fuel prices by boosting clean energy production.
Energy Secretary Ed Miliband said: “Last year’s auction was a disaster, securing zero offshore wind projects and delaying our transition from expensive fossil fuels to energy independence. We are now supporting the UK’s construction industry with our biggest auction budget yet, restoring the UK as a world leader in green technology and delivering the infrastructure needed to drive energy independence, protect billpayers and become a clean energy superpower.”
This summer, offshore wind projects will compete for funding of up to £1.1bn, up from £800m. Analysts at Jefferies estimate this could generate 6-7 gigawatts of offshore wind energy, enough to power nearly 5 million homes.
Onshore wind and solar projects will receive £185m, up £65m on previous figures, while funding for emerging clean energy technologies, such as floating offshore wind and tidal power, will double to more than £270m.
Miliband’s announcement comes after warnings from senior executives that Labour’s ambitious clean energy targets may already be at risk. The party has pledged to triple onshore wind, triple solar and quadruple offshore wind capacity by 2030.
Damien Zaklod, Managing Director of EnBW UK, highlighted the critical importance of the next 18-24 months to achieving the government’s offshore wind targets by 2030. Keith Anderson, CEO of Scottish Power, welcomed the budget increase, describing it as a crucial investment signal to make the UK a clean energy superpower and drive economic growth.
The contracts offered guarantee a fixed price for each unit of clean electricity generated, which is financed through energy bills. However, because renewable energy costs often fall below market prices, these contracts typically result in payments to bill payers.
The adjustment comes amid a record year for renewable energy generation in the UK. Official data shows renewables provided 46.4% of the country’s electricity in 2023, overtaking fossil fuels, which accounted for 36.7%.
Wind power was the main 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 made up 11.2% of electricity production.
