Ministers could offer offshore wind developers three new opportunities to compete for government subsidies.
Energy secretary Amber Rudd last week said the government would run fresh contests through the Contracts for Difference scheme - with offshore wind set to benefit as long as generation costs keep falling.
Contracts for Difference allow energy firms to be paid a premium by the government, calculated by subtracting the wholesale price of energy from an agreed “strike price”.
Rudd has indicated the government is ready to run three more contests for such deals by 2020 - although a government spokesman said only one of these was guaranteed to involve so-called emerging technologies such as offshore wind.
“We should support the growth of our world leading offshore wind industry,” Rudd said.
“I can announce that - if, and only if - the government’s conditions on cost reduction are met - we will make funding available for three auctions in this Parliament.
“We intend to hold the first of these auctions by the end of 2016.”
She added that wind energy firms were confident they can cut the price of offshore power.
“The industry tells us they can meet that challenge, and we will hold them to it,” she said. “If they don’t there will be no subsidy. No more blank cheques.”
Renewables firms said the announcement provided much-needed clarity and encouragement for offshore developers.
Maf Smith, deputy chief executive of trade body RenewableUK, said wind power provided almost 10% of the UK’s electricity last year, and was set to contribute double that amount by 2020.
“We’re a windy country and we shouldn’t turn our back on this great resource,” said Smith.
“Industry has already shown it can rise to the challenge of reducing costs, and offshore wind companies are confident they will be cost competitive with new gas and new nuclear by 2025.”
Smith also urged the government to back land-based wind energy generation.
“Onshore wind has already achieved the kind of cost reductions needed to be competitive and is now one of the cheapest sources of home-grown power in the UK,” he said.
“If we want to cut emissions and keep bills low, the government needs to show that it won’t stand in the way of subsidy-free forms of power, like onshore wind, being able to access our energy market and compete head-to-head with options like nuclear and gas.”
Rudd said the UK was looking for a wave of new nuclear plants to follow Hinkley Point C in Somerset, which is inching ever closer to a start on site.
“Opponents of nuclear misread the science,” said Rudd. “It is safe and reliable. The challenge, as with other low carbon technologies, is to deliver nuclear power, which is low cost as well. Green energy must be cheap energy.
“We are dealing with a legacy of under-investment and with Hinkley Point C planning to start generating in the mid-2020s, this is already changing.
“It is imperative we do not make the mistakes of the past and just build one nuclear power station. There are plans for a new fleet of nuclear power stations, including at Wylfa and Moorside. It also means exploring new opportunities like small modular reactors, which hold the promise of low cost, low carbon energy.”
In a major speech on energy policy, the minister announced plans to close all coal-fired power stations by 2025. Coal is used to generate energy at 12 plants across the UK, although three of these are expected to close within the next six months.
Rudd said: “Energy security comes first and I am determined to ensure that the UK has secure, affordable, and clean energy supplies that hardworking families and businesses can rely on now and in the future.
“We are tackling a legacy of underinvestment and ageing power stations which we need to replace with alternatives that are reliable, good value for money, and help to reduce our emissions.
“It cannot be satisfactory for an advanced economy like the UK to be relying on polluting, carbon intensive 50-year-old coal-fired power stations.”