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UK raises guaranteed maximum electricity price for wind developers
Financial Times|Rachel Millard|Jul 23, 2025
Ministers on Wednesday published the terms for this year’s upcoming auction of subsidy contracts for renewable energy projects that will be built over the next several years. It wants it to be the largest auction yet in order to meet its clean energy goals. The maximum guaranteed price on offer for offshore wind farm developers will be £113 per megawatt-hour, up from £102/MWh last year, while for onshore wind the maximum price has climbed from £89 to £92/MWh. (All prices are at 2024 rates).
Ministers on Wednesday published the terms for this year’s upcoming auction of subsidy contracts for renewable energy projects that will be built over the next several years. It wants it to be the largest auction yet in order to meet its clean energy goals. The maximum guaranteed price on offer for offshore wind farm developers will be £113 per megawatt-hour, up from £102/MWh last year, while for onshore wind the maximum price has climbed from £89 to £92/MWh. (All prices are at 2024 rates).
Increase highlights challenge Labour faces in meeting pledge to reduce household bills
The UK government has increased the maximum electricity price it is prepared to guarantee companies developing new wind farms, highlighting the challenges it faces in trying to bring down costs for households.
Ministers on Wednesday published the terms for this year’s upcoming auction of subsidy contracts for renewable energy projects that will be built over the next several years. It wants it to be the largest auction yet in order to meet its clean energy goals.
The maximum guaranteed price on offer for offshore wind farm developers will be £113 per megawatt-hour, up from £102/MWh last year, while for onshore wind the maximum price has climbed …
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Increase highlights challenge Labour faces in meeting pledge to reduce household bills
The UK government has increased the maximum electricity price it is prepared to guarantee companies developing new wind farms, highlighting the challenges it faces in trying to bring down costs for households.
Ministers on Wednesday published the terms for this year’s upcoming auction of subsidy contracts for renewable energy projects that will be built over the next several years. It wants it to be the largest auction yet in order to meet its clean energy goals.
The maximum guaranteed price on offer for offshore wind farm developers will be £113 per megawatt-hour, up from £102/MWh last year, while for onshore wind the maximum price has climbed from £89 to £92/MWh. (All prices are at 2024 rates).
The increases come despite the government extending the length of the contracts up for auction, from 15 years to 20 years, in an effort to lower the prices it needs to guarantee developers.
The wind energy industry has faced rising costs over the past few years because of strained supply chains and higher interest rates, meaning many developers need higher guaranteed prices in order to finance their projects.
The UK’s energy department stressed that the maximum price allowed was not a prediction of the prices that would be fixed as a result of the auction, because developers often bid below the maximum price to try to win contracts.
The energy department said: “The ASP [administrative strike price, ie the maximum price] is not a prediction of price — the auction will reveal the true price, just like it did last year, where the auction cleared at prices significantly lower than the ASP.”
The department added that the maximum price would also be “less relevant” than in previous auctions because of technical changes to the way the auction would be run.
Claire Coutinho, shadow energy secretary, described the figures as “gruesome” and said they reflected the government’s fixation on its target of decarbonising the power sector by 2030.
“These prices are high because [energy secretary Ed Miliband] told the market he’s got to buy whatever they’re selling, no matter the price, to meet his mad targets. This is what we’ve been warning about.”
During the general election campaign, Labour pledged that by 2030 it would cut annual household energy bills by £300, arguing that moving away from fossil fuels should bring bills down.
The maximum prices published on Wednesday vary by technology and range from £75/MWh for solar, down from £85 last year, to £271/MWh for floating offshore wind, up from £245.
Under the contracts sold at auction, the government guarantees developers a fixed price for the electricity they sell to consumers over the first 20 years of the project’s life, funded if necessary via a levy added to household bills.
Should the fixed price be higher than the fluctuating wholesale price at the time, households would top up the difference, via the energy bills they pay through their utility. But if the fixed price is lower than the wholesale price, then developers would pay back the difference.
This “contracts-for-difference” scheme has been crucial to developing renewable energy in Britain and offshore wind in particular, because the price certainty helps developers finance projects.
Any cost to households of the contracts depends on future wholesale prices. The contracts can cost consumers nothing or even mean they pay less for electricity than they otherwise would.
The current spot market wholesale price in Britain is about £70-£75/MWh.