United Kingdom

United Kingdom

UK offshore down to £39.65/MWh, with 5.4GW awarded

Offshore wind strike prices fell by almost a third, with nearly 5.5GW awarded across six offshore wind farms in the UK's latest contracts for difference (CfD) tender.

UK offshore prices have plummeted since the introduction of the contracts for difference scheme
UK offshore prices have plummeted since the introduction of the contracts for difference scheme

Six offshore projects with a combined capacity of 5,466MW secured CfD deals, with a price range of £39.65-41.61/MWh in 2012 prices (€52.48-55.08/MWh in 2019 prices).

The lowest price bid — £39.65/MWh, secured for three projects due online in 2023/24 — is 31% lower than the £57.50/MWh lowest bid in the most recent CfD auction, itself a 50% reduction from the UK’s first tender.

Equinor and SSE took the lion’s share of the capacity awarded, co-developing three successful projects with a combined capacity of 3.6GW, while the latter also secured a contract for a further 454MW of capacity.

Innogy also won a power deal for 1,400MW, while 2-B Energy secured the sixth contract for a 12MW pilot project that will use two-bladed turbines installed on jacket foundations. 

Offshore winners

Equinor and SSE won contracts for the Creyke Beck A P1, Creyke Beck B P2, and the Teesside A P1 sites.

All have a planned capacity of 1.2GW and are located in the Dogger Bank development zone, far off the UK's east coast. 

The first phase of Dogger Bank Creyke Beck will be commissioned first in 2023/24 and generate power under a contract for £39.65/MWh, while the remaining two projects will be commissioned a year later in 2024/25 and receive the higher price of £41.61/MWh.

Equinor said the auction results "reflect the continued cost reductions and technological development and the increasing competitiveness of bottom-fixed offshore wind". 

Its CEO Eldar Sætre added: "Excellent wind speeds, shallow waters and scale make Dogger Bank well-positioned to deliver low-cost renewable electricity to UK homes and businesses."

SSE will also build a 454MW first phase of its planned 1,050MW Seagreen project off the east coast of Scotland.

It will commission the project in 2024/25 and receive a price of £41.61/MWh under its contract. The utility bought out joint venture partner Fluor from the project last September.

Germany's Innogy secured a deal for its 1.4GW Sofia project, which, like Equinor and SSE’s projects will be built off the Yorkshire coast.

The developer made a winning bid of £39.65/MWh and will commission the project in 2023/24, after the German companies renewables assets have been absorbed by compatriot RWE.

It was initally planned for 1.2GW, but Innogy ramped up its capacity to 1.4GW to reflect turbine's higher capacities.

Meanwhile, 2-B Energy — a developer that designed a two-bladed turbine — won a deal for its 12MW Forthwind site off Scotland. It won with a bid of £39.65/MWh and plans to commission its site in 2023/24.

Remote island winners

Developers also secured contracts for four onshore wind farms on remote islands off the coast of mainland Scotland.

Ordinarily onshore wind farms are barred from competing at auction in the UK, but former energy minister Claire Perry made an exception for so-called remote island projects, allowing them to compete in this tender.

Uisenis Power was successful with a bid of £39.65/MWh for its 189MW Muaitheabhal development.

The project will be built on the Isle of Lewis off the north-west coast of the Scottish mainland, commissioned in 2023/24 and receive £39.65/MWh.

Druim Leathann, a 49.5MW wind farm will also be built on the Isle of Lewis. Its operators, Velocita Energy Developments and Forsa Energy, will receive £41.61/MWh after it is commissioned in 2024/25.

Hoolan Energy secured power deals for its 16.32MW Costa Head and 20.4MW Hesta Head wind farms that will be built on the Orkney Islands.

The developer will receive £39.65/MWh after commissioning them both in 2023/24.

However, while four projects on remote Scottish islands secured contracts, SSE and the Shetland Charitable Trust’s planned 457MW Viking wind farm on the Shetland Island was unsuccessful.

Scottish Renewables’ Claire Mack said that this jeopardises a planned interconnector cable for the islands.

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