It was a record-setting auction and a significant step forward in our mission for clean power for 2030, trumpeted the energy secretary, Ed Miliband, enjoying the contrast with last year's auction flop under the Tories in which precisely zero bids were received to build offshore windfarms.
Miliband is right about the return of a general feelgood vibe around renewables, which may owe something to his vote of confidence in the contracts-for-difference (CfD) regime as an effective price-discovery mechanism for renewables.
The winning bids for offshore wind settled at 54/MWh and 58/MWh (again in 2012 numbers), better than expected. Even when one converts the numbers to today's prices to get 75/MWh and 82/MWh, that equates to a shade under the current wholesale electricity price of 84/MWh.
Miliband's target of having 60 gigawatts of installed offshore wind capacity by 2030 is still a long way from being credible. Just do the back-of-the-envelope arithmetic: there is about 15 gigawatts of capacity operating today; add the projects commissioned in Tuesday's auction result plus those already under construction and you still only get to a grand total of about 27 gigawatts.
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