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If you’ve seen headlines claiming the government is pushing up the price of renewable energy—especially offshore wind – don’t panic.

It’s technically true that maximum prices are rising, but here’s what’s really going on:

• The UK government holds annual auctions where clean energy developers bid for government-backed contracts.

• These contracts guarantee them a fixed price per megawatt-hour (MWh) of electricity for 15–20 years.

• But the last auction, in 2023, flopped—no offshore wind developers bid at all. Why? Because the price on offer was too low to make projects financially viable.

• To fix that, the government has raised the ceiling price (the “Administrative Strike Price”) to attract bidders this year.

• This isn’t the price consumers will pay. It’s just the maximum. Companies still have to bid lower than that to win a contract.

• In short: raising the cap is necessary to get projects built. Without it, we risk missing our 2030 clean energy targets and staying hooked on expensive fossil fuels.

Now let’s break down what’s actually happening and why some politicians are misrepresenting it.

The background: how clean energy auctions work

The UK uses a system called Contracts for Difference (CfDs) to encourage investment in renewable energy.

Here’s how it works:

1. Developers bid for contracts to sell clean electricity to the grid.

2. The government sets a maximum price it’s willing to pay (the ASP).

3. Developers submit bids below that price.

4. The lowest bids win—and that becomes the clearing price.

5. If electricity prices go above that, developers refund the difference; if prices fall below, government tops them up.

It’s a system that has worked well—until last year.

What Went Wrong in 2023?

In 2023, the Conservative government set the ASP for offshore wind too low.

With rising costs (thanks to inflation, interest rates, and supply chain issues), developers simply walked away.

No one made a bid.

Zero offshore wind projects were awarded.

This was a serious failure, especially since offshore wind is crucial to the UK’s goal of a fossil-free grid by 2030.

What’s changing this year

There was no auction in 2024 because the new, Labour, government wanted to redesign the system after the 2023 failure.

To avoid another auction failure, the current government has:

• Raised the ASP for offshore wind (from £102 to £113/MWh)

• Increased it for floating wind (from £245 to £271/MWh)

• Kept increases modest for onshore wind and lowered it for solar

• Extended contract lengths (from 15 to 20 years), making projects more attractive

• Opened bidding to projects without full planning permission

• Given the Energy Secretary more control over final auction rules

This is about making the auction work again—so we can actually build the projects needed.

Are bills going up because of this?

Not necessarily—and probably not.

• The ASP is just the ceiling. Actual prices could still come in lower if there’s strong competition.

• The last successful auction delivered prices well below the ASP.

• If we fail to build renewables, we’ll remain vulnerable to volatile gas prices, which really do drive up bills.

• Long term, more clean energy means cheaper, more stable prices.

The politics of it all

Critics, especially some Conservatives, are calling these new ASPs “eye-watering.” But:

• It was their own government that set the 2023 prices too low, causing the auction to fail.

• Labour’s current changes are a course correction, not radical policy.

• The alternative—another failed auction—would mean no new wind farms, no progress toward net zero, and continued exposure to fossil fuel price shocks.

This isn’t about “pushing up renewable prices.”

It’s about setting realistic ceilings that can actually get projects built in a challenging economic environment.

If all goes well, the auction will still deliver competitive prices—and help build the clean energy future we need.

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