Scottish Power has warned that “shovel-ready” offshore wind farms that could contribute to the government’s 2030 clean energy target have missed out on funding contracts for earlier projects that may not be built on time, or at all.
The row focuses on the latest Contracts for Difference (CfD) funding auction, Allocation Round 7 (AR7), the results of which were published in January. CfDs guarantee developers a fixed amount of electricity they produce, which supports the economics of large renewable projects.
Scottish Power was hoping to secure funding for its East Anglia One North offshore wind farm off the Suffolk coast. The project is fully approved and, according to the company, it can power up to 900,000 homes. However, it failed to win the contract, losing out to six other overseas proposals.
Keith Anderson, the chief executive of Scottish Power, said the result was very frustrating because his company could have quickly moved away from the final investment decision.
“We had a really shovel-ready job,” Anderson said. “We would have made the final investment decision the day after the contract was awarded. Construction would have started immediately and the project would have been fully operational before the end of 2030.”
Instead, the winning projects include schemes that are in earlier stages of development. Two of the six do not yet have planning permission, and several have yet to finalize property purchase agreements.
The five successful bids were led by RWE, the German energy group. RWE admitted earlier this year that not all of its AR7 projects are likely to be operational by 2030, the government’s deadline to achieve 95 percent clean electricity generation.
Anderson said the legislative changes introduced in AR7, which allow projects to bid before obtaining planning permission and before closing supply chain contracts, increase the risk of non-delivery.
“In the past, we have seen speculative bids,” he said, referring to previous offshore projects that won contracts but were withdrawn when rising costs made them uneconomic. Inflationary and supply chain pressures have forced developers in the past to refinance CfD contracts rather than continue to incur losses.
The concern is that early projects may experience similar cost overruns or scheduling delays, undermining the government’s clean energy plan.
RWE defended its position, saying that planning permission for its flagship projects was “very advanced” and that negotiations with suppliers were ongoing. It said it remains confident that, subject to timely grid connections, its AR7 portfolio will be delivered.
The Ministry of Energy Security and Net Zero said the results of the auction “put us in a strong position to return to delivering clean, home-grown energy by 2030”, maintaining that the CfD process continues to drive investment in offshore wind on a large scale.
The dispute highlights a wider rift within the UK’s energy transition strategy: whether auction rules should prioritize rapid construction readiness or increase competition by placing projects at earlier stages of development.
With Scottish power, the message to teachers is clear. Anderson said the company is now pressing the government to move ahead with the next round of CfD auctions this year. “We can still get this project built in 2030,” he said. “It will make a significant contribution to your net-zero goal, but it requires certainty.”
As the race to meet the 2030 targets intensifies, the credibility of the funding system, and its ability to translate successful auctions into water, is likely to face increasing scrutiny from industry and investors alike.
