UK CfD auction tipped to show big fall in offshore wind costs

317-MW Sheringham Shoal wind farm off UK. Author: Martin Cooper. License: Creative Commons. Attribution 2.0 Generic

Sep 8 (Renewables Now) - As the offshore wind industry is gearing up for the results on Monday of the UK government's contracts for difference (CfDs) auction, RenewableUK projected these will show a significant drop in offshore wind costs.

The cost of offshore wind is expected to be significantly lower than that of new nuclear power, the industry body further said in a press release today.     

In the UK's first CfD auction, whose outcome was unveiled in February 2015, offshore projects won contracts at strike prices of GBP 114-120 per MWh, but costs in the sector have been falling fast recently. The administrative strike prices for the second auction have been set at GBP 105 per MWh for projects to be delivered in 2021/22 and GBP 100 for 2022/23 projects.

Only less established generation technologies, including offshore wind, can take part in the current bidding. 

RenewableUK simultaneously released a report which shows that a growing portion of the offshore wind spending goes to UK companies. According to the study, 48% of the expenditure in planning, building and operating offshore projects in the country is channelled to British companies, an increase from 43% in the previous such report in 2015. The industry has thus almost reached its 2020 goal of 50% UK content.  

Over the next four years, the sector will invest GBP 11.5 billion (USD 15.2bn/EUR 12.6bn) in the UK economy, the report says, more than the amount of spending on broadband and mobile network infrastructure.

"Monday’s auction results could be a watershed moment for the UK offshore wind sector," said RenewableUK's executive director Emma Pinchbeck. "The offshore wind sites that win on Monday will be a catalyst for our future economy and will provide cheap, clean electricity for UK consumers," she added.

Minister for Energy and Industry Richard Harrington said that the report shows the strength of the growing sector and that the government will continue to support offshore wind developments through its Industrial Strategy.  

(GBP 1 = USD 1.321/EUR 1.095) 

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Browse all articles from Plamena Tisheva

Plamena has been a UK-focused reporter for many years. As part of the Renewables Now team she is taking a keen interest in policy moves.

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