United Kingdom

United Kingdom

RWE to bid for Galloper CfD subsidy

UK: RWE intends to bid for a contract for difference (CfD) government subsidy in the first round of financing for its revived 340MW Galloper project.

Galloper would be located off the east coast of the UK
Galloper would be located off the east coast of the UK

RWE shelved the project in October, citing time constraints to secure financing under the outgoing renewables obligation certificate (ROC) scheme.

It had planned for the project to be included under ROCs. But due to a change in subsidy programmes in the UK, RWE was uncertain whether it would successfully gain the support and pulled back from the project.

In December, RWE said it was investigating all options to revive the project under the CfD scheme.

Richard Sandford, head of offshore wind at RWE, said the company had qualified to bid for a CfD in December.

"We are eligible to bid and it is our intention to bid for a CfD," said Sandford. RWE will be able to enter a sealed bid for a CfD in February.

Galloper, however, is still eligible under the outgoing ROC, due to the scheme's grace period being extended. Sandford said the project would use the ROC "to fall back on" in the event it fails to secure a CfD.

"We've got both options open to us. Galloper is in a very fortunate position," he said.

Conditions around the grace period mean the first turbine at the project must be generating power by March 2018. Sandford said this "cliff-edge" to securing funding was a "manageable risk".

RWE Innogy chief operating officer, Paul Coffey, added, "We are going to give it a try. We think from a financing perspective the CfD is an attractive solution. It does not have market risk.

"The issue for us is it is a competitive process for the CfD. Probably only one, or two small [projects], could get through. What we do not know is whether that will be Galloper.

"We are going to bid, we are going to bid a good price, and then we will have to see what happens. If we do not get a CfD then we will go down the ROC route," Coffey said.

Winners of a CfD will be notified on 18 March at the earliest, the Low Carbon Contracts Company confirmed in December.

RWE also said Galloper is looking to use a different turbine than was originally planned.

When asked about a change in technology to the project, Sandford said it would be "a big change along those lines". He also said the company was in discussion with another turbine manufacturer.

"The turbine we are looking at now has a greater energy capture," he said, adding the change in turbine size falls within the project's consented parameters.

Galloper would remain around the 340MW capacity, meaning fewer turbines would be required.

RWE is also looking to divest some of its interest in Galloper, as the company slashes its renewable energy investment up to 2017.  

RWE currently holds a 50% share in the project. "We will be looking at reducing that share down to about 25%, and ideally securing three other partners. We will end up with a consortium very similar to Gwynt y Mor," Sandford explained. 

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