September 23 (Renewables Now) - The UK could be producing electricity from offshore wind farms at prices lower than these of existing gas-fired power plants as early as 2023, according to an analysis by Carbon Brief, published soon after the results of the third contract for difference (CfD) round were announced.
The price per MWh for offshore wind projects scheduled for completion in 2023/24, one Dogger Bank scheme, Innogy's Sofia park and the Forthwind development, arrived at GBP 39.65 in the auction. This is in 2012 prices and translates into GBP 44/MWh adjusted for inflation. Significant progress in the reduction of offshore wind costs has been achieved as the first UK offshore wind projects with CfDs got a rate of GBP 150 per MWh in 2012 prices.
Under the CfD model, power plants are guaranteed the exact strike price for 15 years. If the reference price goes below it, they get a subsidy, but if the wholesale price is higher, they have to pay the difference.
“If the market follows the government’s reference price expectations, then the new renewable schemes will pay nearly GBP 600 million towards consumer bills by 2027, instead of receiving a subsidy,” Carbon Brief calculates.