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Government Intervention - Price paid for UK offshore power to rise by 66%

Graham Watson

16th November 2023

I suspect that this is one of the more unusual examples of a minimum price, or a price floor is you prefer, with the government announcing that it is going to raise the guaranteed price that it pays for offshore wind power from £44 MWh to £73. Such a price is known as the 'strike price' and only comes into effect when market energy prices fall below it.

The reason that this has happened is because in the recent auction for offshore wind licences there wasn't a single bidder, with energy companies arguing that the rising costs meant that the existing strike price wouldn't guarantee them enough to justify any investment. Offshore wind power now provides nearly 15% of the UK electricity.

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.

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