A better auction for offshore wind than last time
The UK’s last auction didn’t get any bids from offshore wind. The price ceiling was too low. The UK then raised the price ceiling for this auction by 66% to a more realistic £73/MWh. The new Labour Government then increased the budget for this auction, which helped get a few more projects though than looked likely a few months ago.
The overall result is a reasonably good auction for offshore wind. Nine bottom-fixed projects totalling 4.9GW of new capacity have won Contracts for Difference (CfDs). And one floating wind project of 400MW got a CfD too. But the UK will need bigger volumes from its next auctions if it’s going to meet its ambitious 2030 goals for offshore wind.
The winning offshore wind projects include:
Hornsea 3 (1.1GW) – Ørsted at a strike price of £54.23/MWh
Hornsea 4 (2.4GW) – Ørsted at £58.87/MWh
East Anglia 2 (support awarded for 963MW) – Iberdrola / ScottishPower Renewables at £58.87/MWh
East Anglia 3 (158.9MW)- Iberdrola / ScottishPower Renewables at £54.23/MWh
Inch Cape A & B (266MW) – ESB and Red Rock Renewables at £54.23/MWh
Moray West Offshore Wind Farm (73.5MW) – OW Ocean Winds and Ignitis Group at £54.23/MWh
Green Volt Offshore Wind Farm (floating) £139.93/MWh
Things looking up for onshore wind
This latest auction awarded CfDs to 22 onshore wind farms totalling 990MW. The average strike price was £59.90/MWh. Most of the onshore projects are in Scotland. Some are in Wales, and there is a small one one in England. The new UK Governments has lifted the de facto ban on new onshore wind in England, but it will take a while for projects to come through in the auctions – the Government is setting up an onshore wind taskforce to unlock the barriers to onshore wind and restore a sizeable pipeline of new projects in England.
The new wind farms awarded in this auction, offshore and onshore, will mean over £14bn of new private investment. The first projects will start generating electricity in 2026.
The expansion of wind energy is at the centre of the new UK Government’s goal to fully decarbonise UK electricity consumption by 2030. They have committed to double onshore wind and quadruple offshore wind capacity by 2030. The industry will have to step up the build out of projects and maximise the volumes and budget per auctions.
“This is going in the right direction – and it is a big improvement on last year’s failed offshore wind auction. But the UK needs to secure more clean energy capacity in each annual auction reach its current targets. Auctions like this also help to unlock new supply chain investment – and are key to strengthening the UK’s existing supply chain”, says Giles Dickson CEO of WindEurope.
