In the latest Contracts for Difference round, no offshore wind projects have achieved success, while support has been granted to 3.7GW of alternative technologies.
The results from Allocation Round 5 reveal that only 53MW of tidal stream and 12MW of geothermal projects have secured funding from Pot 2.
Both fixed-bottom and floating offshore wind projects have been left without Contracts for Difference, as concerns were raised by both sectors about the adequacy of the £44/MWh and £116/MWh strike price caps in light of a 40% increase in costs.
The inability to secure capacity, in contrast to the 7GW of offshore wind secured in last year’s AR4, will be viewed as a significant setback for the government’s goal of reaching 50GW of capacity in the sector by 2030.
On the other hand, solar projects have emerged as the biggest winners in AR5, with a total capacity of just over 1.9GW receiving support, featuring a strike price of €47/MWh from Pot 1.
In Pot 1, nearly 1.5GW of onshore wind projects have also been granted support, with a strike price of £52.29/MWh.
SSE Renewables secured a 223MW Contract for Difference valued at £52.29/MWh for its Viking wind farm on Shetland, making it the sole project from remote islands to gain approval in this round.
Keith Anderson, the CEO of ScottishPower, said AR4 “is a multi-billion pound lost opportunity to deliver low-cost energy for consumers and a wake-up call for government”.
“The CfD process is recognised globally as a lynchpin of the UK’s offshore success, but it also needs to flex to keep pace with the world around it. We all want the same thing – to get more secure, low-cost green offshore wind built in our waters. ScottishPower is in the business of building wind farms and our track record is second to none in terms of getting projects over the line when others haven’t been able to. But the economics simply did not stand up this time around.”
“We need to get back on track and consider how we unlock the billions of investment in what is still one of the cheapest ways to generate power and meet the UK’s long-term offshore wind ambitions for the future.”
In the previous Allocation Round, support was granted for 11GW of renewable energy capacity, which included 7GW of offshore wind.
Out of the five offshore wind projects that secured Contracts for Difference at £37.35 per megawatt-hour, only two have proceeded to the final investment stage. Vattenfall, in particular, decided to shelve its successful 1.4GW Norfolk Boreas project, citing a 40% increase in costs.
Labour has criticized the results of the Contracts for Difference round as an “energy security disaster” for the UK.
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