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Britain’s failure to attract offshore wind developers in its latest renewables auction must be a “wake-up call” for the country, the head of one of the world’s largest renewable energy companies has warned.
RWE chief executive Markus Krebber said “the entire industry” had been vocal about the lack of support provided by UK authorities for offshore wind in annual new project contracts. The funding round resulted in no bids for new offshore wind contracts.
“I don’t think the current framework recognizes the environment of rising inflation,” Kleiber told the Financial Times, echoing similar complaints from across the industry.
RWE generates more electricity than any other company in Germany, producing a quarter of the electricity sold in the country in 2021, the last full year for which data are available.
Kreber, whose company has one of the largest pipelines of offshore projects under construction in the UK, said RWE was one of the developers that decided not to bid for offshore projects this round. Despite this, the company has won a series of contracts for onshore wind and solar projects.
“Hopefully this is a wake-up call for us to make the necessary adjustments and rethink the framework,” Kreber said. “This is certainly concerning because the UK’s climate targets cannot be met without offshore wind.”
The lack of interest is a blow to the UK’s ambition to more than triple its offshore wind capacity to 50 GW by the end of the century – which is central to its goal of achieving net zero carbon emissions by 2050 pillar.
Kleiber expressed bewilderment at Britain’s strategy and contrasted it with Britain’s support for nuclear energy.
“I find it difficult to understand (why there is) a support scheme where, for example, new nuclear power costs so much more per megawatt hour than offshore wind,” Kreber said. “Offshore wind can be built in time if it is supported in the right way. And when you follow the news about nuclear power, you have no idea when it will show up and at what price.”
The UK government responded to criticism by highlighting the success of this year’s onshore wind and solar auctions, with a total of 3.7GW of onshore wind, solar, tidal and geothermal power contracts awarded.
The RWE CEO said clear long-term direction from governments in areas such as offshore wind was crucial to ensuring Europe could meet its ambitious carbon neutrality goals.
Kreber also expressed concern about the pace of change in upgrading and revamping the continent’s energy grid. Significant additional capacity will be needed to cope with the changes in supply and demand brought about by the phase-out of fossil fuel power generation and the electrification of large-scale transport and industry.
“I’m hearing that the current bottleneck in all European countries has shifted from planning and permitting to grid connection,” Kleiber said.
However, he pointed to the German government as an example of good practice in offshore wind planning, setting clear targets for future capacity and conducting auctions ahead of those dates. He said the approach gave people “clarity and confidence” in the grid.
Kleiber added that his other big concern is the renewable energy supply chain, where manufacturers are already under pressure due to rising costs, tighter financing conditions, strong demand and competition from China.
He said he was particularly worried about the long-term prospects, citing a lack of manufacturing capacity for batteries, solar panels, transformers, cables and installation vessels.
“If you . . . just add up the renewable energy buildout targets in Europe and the U.S. and compare that to manufacturing capacity . . . you realize that the current supply chain is not going to be able to meet the expansion targets,” Kleiber said explain.
He added that “massive investment and capacity improvements” are needed.
Kleiber said that, as with grid expansion, clearer forward planning would be an important step in easing pressure on suppliers and expanding capacity.
“We still have plenty of time to fix the problem, but we have to start now,” he said. “If we’re just talking about planning and consent now, we’re going to wake up in three years’ time and say, ‘OK, that’s all worked out, but now we have the next wave of bottlenecks’.”
Additional reporting by Rachel Millard in London
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