Lower offshore wind prices driving contracts
Cost reductions in offshore wind are fuelling growth in industry contracts with three UK offshore wind projects making successful bids.
DONG Energy’s Hornsea 2 off the coast of Yorkshire, Innogy and Statkraft’s Triton Knoll off the coast of Lincolnshire and EDPR’s Moray off the northeast coast of Scotland put in the lowest bids for Contracts for Difference (CfDs) in the Department for Business, Energy and Industrial Strategy’s second competitive clean power auction.
RenewableUK’s chief executive, Hugh McNeal, said: “Record-breaking cost reductions like the ones achieved by offshore wind are unprecedented for large energy infrastructure.”
The cost of offshore wind has plummeted since the last competitive auction results were announced in February 2015, with the new prices on average 47% lower than they were just over two and half years ago.
3,196 megawatt capacity
Offshore wind prices are currently cheaper than the cost of the 35-year contracts for new nuclear power of £92.50 per megawatt hour (MWh), and cheaper than the levelised cost of gas, according to figures from the Department of Business, Energy and Industrial Strategy.
The new wind farms have a total capacity of 3,196 megawatts and will power the equivalent of more than 3.3m homes.
Hornsea 2 and Moray will begin generating in 2022/23 at £57.50/MWh and Triton Knoll in 2021/22 at £74.75/MWh, with prices guaranteed for 15 years of an expected project life of 25 years.
Grangemouth Renewable Energy Limited also received a CfD for its dedicated biomass with CHP plant, which will be delivered in 2021/22.
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