The government has blown up the UK’s reputation for excellence in offshore wind

Sherlock Holmes famously remarked to Watson that, “when you have eliminated all which is impossible then whatever remains, however improbable, must be the truth.” I was thinking about this quote when pondering the failure of the British government to receive any bids in the latest offshore wind auction.

The government knew about inflation within the sector; it knew that the price floor was too low; it knew that it wouldn’t receive any bids if it didn’t change the price floor; it knew that the potential bidders weren’t bluffing given the action those same bidders were taking to protect their renewable projects elsewhere. And yet it did nothing and now all its plans and targets are up in smoke.

So why did it do nothing? If the answer was that it thought that input prices are temporarily high at the moment which would therefore create a bad deal for the taxpayer, it would have said so when the auction failed. But it didn’t. It could have suspended the auction and suggested that it might go for a bumper auction when prices cool. But it didn’t. In fact the quotes from the Minister – as so often with modern political communications – simply ignored the problem and talked about the success of other parts of the auction. So it’s clear that the “whatever remains” here has to be incompetence. Rank incompetence – which has put all its targets and plans for 2030 in danger and blown up the UK’s reputation for excellence in offshore wind at the same time.

Obviously ministers must take the blame but you have to wonder at the advice that they were receiving. It can’t be beyond the bounds of possibility that a reasonably informed minister would have a.) observed rising inflation and interest rates for themselves or b.) wondered if the companies making representations to the energy department were not bluffing and then asked their civil servants “what gives?”. One can only wonder at the answer they got because the outcome of the auction is a disaster for renewable power in the UK and if it wasn’t a disaster, they would have told us so. But they didn’t.

PS one small bugbear of mine. The failure of the auction was not down to government not giving the industry a subsidy that it was asking for. The price floor is about the price the energy companies can charge the consumer. That’s not to say that there aren’t subsidies in the renewable energy sector but the global energy sector, including oil and gas, has been built for generations on the back of the taxpayer. Governments, in the end, will do anything to make sure those lights come on when you flick the switch and it’s no different now than before.