Three Offshore Wind Projects Secure Contracts for Difference as Strike Prices Go Down

The UK government has awarded three offshore wind projects with Contracts for Difference (CfD) in the second round of auctions with strike prices going as low as GBP 57.50/MWh for projects scheduled for commissioning in 2022/23.

The three projects to receive the CfDs are the 860MW Triton Knoll offshore wind farm off England, the 1,386MW Hornsea Project Two off England, and the 950MW Moray Offshore Windfarm (East) off Scotland, according to the results published by the Department for Business, Energy & Industrial Strategy (BEIS).

The Triton Knoll project is scheduled for commissioning in 2021/22 and will be delivered at a strike price of GBP 74.75/MWh.

The Hornsea Project Two and the Moray Offshore Windfarm (East) are scheduled for commissioning in 2022/23 and will be delivered at a strike price of GBP 57.50/MWh, 50% lower compared to the results of the first auction held in 2015.

All three projects are to be built in three phases, with the first phases expected to be commissioned in 2021 and 2022, respectively.

BEIS launched the second CfD auction in April 2017. At the time, the strike price cap for offshore wind projects coming online in 2021/22 was GBP 105/MWh, and for those that will start generating energy in 2022/23 the strike price was capped at GBP 100/MWh.

Overall, eleven new energy projects worth up to GBP 176m per year have been successful in the UK’s latest competitive auction for renewable technologies, BEIS said. The projects are set to generate over 3GW of electricity.

”We’ve placed clean growth at the heart of the Industrial Strategy to unlock opportunities across the country, while cutting carbon emissions,” the UK’s Minister for Energy and Industry, Richard Harrington, said.

”The offshore wind sector alone will invest £17.5bn in the UK up to 2021 and thousands of new jobs in British businesses will be created by the projects announced today. 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.”

Contracts for Difference are designed to drive investment in a new generation of clean, secure electricity supplies. Successful projects receive 15-year contracts.

The Low Carbon Contracts Company (LCCC) now has 10 working days in which to make an offer to successful developers. Developers then have 10 working days after the offer is made to return signed contracts.