The UK’s government has confirmed that over 3 GW of new renewable energy projects will be built in the country following the latest contracts for difference (CFD) auction.
The auction has awarded CFDs to 11 new projects, including three large-scale offshore wind energy projects and a number of biomass projects.
The Renewable Energy Association (REA) said that the auction results showed “huge price reductions across the board” for renewable energy technologies.
“These results show that renewables are now the most cost effective form of any energy generation which can future proof both the UK grid and provide sustainable new jobs in the UK,” said James Court, Head of Policy and External Affairs at REA.
RenewableUK also highlighted the “dramatic” fall in the cost of renewables, and in particular offshore wind energy. It said that the offshore wind prices announced are cheaper than the cost of the 35-year contracts for new nuclear power of £92.50 per MWh, and cheaper than the levelised cost of gas, according to figures from the Department of Business, Energy and Industrial Strategy.
The winning wind farm projects are 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.
Hornsea 2 and Moray will begin generating in 2022/23 at £57.50 per 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. The three wind farms will generate a total of 3196 MW.
Biomass projects awarded CFD contracts include the 85 MW Grangemouth renewable energy plant, with a strike price of £74.75/MWh, and the 25 MW Northacre renewable energy centre, which will be based on advanced conversion technology (ACT).
Dong Energy said that the strike price for the Hornsea Two offshore wind project is 50 per cent lower than those awarded to offshore wind energy projects in the last CFD auction, held in 2015.
Samuel Leupold, Executive Vice President and CEO of Wind Power at Dong Energy, said: “We’re delighted to be awarded a Contract for Difference for Hornsea Project Two, which is another important step towards fulfilling our vision of making offshore wind the most competitive form of electricity generation.
“We have always promoted size as a key driver for cost. The ideal size of an offshore wind farm is 800-1500 MW, and therefore it is natural that Hornsea Project Two will deliver record-low costs to society. At the same time, the low strike price demonstrates the cost saving potential of developer-built offshore grid connections, which in the UK is included in the project scope.”