In the UK’s fourth allocation phase, which provided funding for a total of 11GW worth of renewable energy projects, five offshore wind projects with a combined capacity of approximately 7GW have been awarded Contracts for Difference.
The strike price for the offshore projects was £37.35/MWh, which is less than the lowest rate in the 2019 round of £39.65/MWh. According to the results released by the Energy Department BEIS this morning, all projects are due online in the delivery years 2026–2027.
The largest contract, worth 2.9GW for Hornsea 3 off the coast of Yorkshire, was won by Orsted.
Located 1.4GW at East Anglia 1 and 1.4GW at Norfolk Boreas, both off the coast of East Anglia, were secured by ScottishPower Renewables and Vattenfall as CfDs.
Following two unsuccessful bids with the project off east Scotland in prior auctions, Red Rock Power and ESB were successful with their 1.1GW Inch Cape proposal.
With 294MW, Ocean Winds secured the smallest offshore wind CfD for its 860MW Moray West wind farm, which already has a PPA in place for 350MW of the total capacity.
The government said the competitive nature of the scheme has continued to place downward pressure on prices. It claimed that the cost of offshore wind per megawatt hour (MWh) secured in this round is over 70% less than that secured in the first allocation round, in 2015.
The second-largest winner was solar, which secured 2.2GW of capacity at strike rates of £45.99/MWh for both the delivery years 2023–2024 and 2024–2025.
1.5GW of onshore wind capacity was installed, with 887MW of projects on the mainland and nearly 600MW of projects on isolated islands.
In the 2024–25 delivery years, the strike price for the former was £42.47/MWh, while contracts for remote island wind were signed at £46.39/MWh.
With a 32MW TwinHub project and a strike price of £87.30/MWh, Hexicon secured the only floating offshore wind CfD.
Tidal stream also joined the party, obtaining support for 41MW of projects totaling £178.54/MWh.
In total, 93 projects in England, Scotland, and Wales with current planning authority have been awarded contracts through the competitive auction procedure, which is more than in the three prior rounds combined.
Kwasi Kwarteng, Business and Energy Secretary, said “Eye-watering gas prices are hitting consumers across Europe. The more cheap, clean power we generate within our own borders, the better protected we will be from volatile gas prices that are pushing up bills.”
“Thanks to today’s record renewable energy auction, we have secured almost 11GW of clean, home-grown electricity– which would provide as much power as around 6 gas fired power stations.
“These energy projects already have planning permission, now they have a funding contract in place. We’re going to these projects built as soon as possible to better protect millions of British families from rising costs.”
CfDs are the government’s main strategy for promoting renewable energy, lowering technology costs and having a significant impact on leveraging £90 billion (€106.9 billion) in private investment by 2030.
Over the previous ten years, the offshore wind cost has already been reduced by almost 65 percent thanks to the auction programme, making the UK one of the largest wind power producers in the world.
Twelve new contracts with a potential additional 6GW of capacity were granted in the most recent round of allocation. National Grid ESO invites qualified bidders to submit their sealed proposals beginning on May 24, 2022.
On June 15, the sealed bid period for Round 4 came to an end. National Grid ESO subsequently conducted the allocation/auction procedure. After the allocation process, the results of an independent audit were revealed after qualifying applicants had been made aware of the auction’s outcomes.
