Sep 11 (Renewables Now) - About 3.2 GW of offshore wind projects will be supported by the UK government under its second Contracts for Difference (CfD) auction.
The keenly awaited results of the competition, announced this morning, show that three offshore wind projects have secured 15-year contracts -- the 1,386-MW Hornsea Project 2 of Dong Energy A/S (CPH:DENERG), the 950-MW Moray Offshore Windfarm (East), a partnership between EDP Renovaveis SA (ELI:EDPR) and Engie SA (EPA:ENGI), and the 860-MW Triton Knoll Offshore Wind Farm, a joint venture between Innogy Renewables UK Ltd and Statkraft.
After much speculation about how much prices for offshore wind will go down in the current round, the strike prices achieved were GBP 57.5 per MWh (USD 75.8/EUR 63.2) for projects commissioning in 2022/23 and GBP 74.75/MWh for projects scheduled for 2021/22. All three offshore wind farms will be built in three phases, with the specified delivery years listed for their first phases.
The UK government pointed out that offshore wind costs have dropped by 50% from its first auction in 2015, when comparing the lowest clearing price for successful projects for 2018/19 delivery and the lowest price for offshore for 2022/23 projects. Besides offshore wind, some 150 MW of other generation technologies were awarded contracts. The list of winners can been seen here.
The support for the successful projects will be worth up to GBP 176 million per year, although the actual figure will depend on how wholesale prices and project-specific operational factors change over time.
"The offshore wind sector alone will invest GBP 17.5 billion in the UK up to 2021 and thousands of new jobs in British businesses will be created by the projects announced today," commented Minister for Energy and Industry Richard Harrington. "This government will continue to seize these opportunities as the world moves towards a low carbon future, and will set out ambitious proposals in the upcoming Clean Growth Plan," Harrington added.
In a press release, Dong noted that Hornsea Project 2 will become the world's largest offshore wind farm, exceeding the 1,200-MW Hornsea Project 1 that it is currently building. It also stressed that the price of GBP 57.5 per MWh is a record low price price for offshore wind in the UK.
"We’re delighted to be awarded a Contract for Difference for Hornsea Project Two, which is another important step towards fulfilling our vision of making offshore wind the most competitive form of electricity generation," said Samuel Leupold, executive vice president and CEO of Wind Power at the Danish company.
Industry body RenewableUK, meanwhile, said that the outcome of the auction mean offshore wind is now cheaper than gas and nuclear.
(GBP 1 = USD 1.319/EUR 1.098)