3GW of offshore wind awarded support as costs fall


Some 3.2GW of offshore wind generation has been awarded subsidies under the government’s contracts for difference (CfD) regime, along with smaller levels of biomass and energy from waste generation.

The contracts for difference system effectively guarantees developers a power price. A so-called strike price is agreed, in most cases, via a reverse auction. If the wholesale power price is higher than that strike price, generators pay back the difference to the government. If the wholesale power price is lower, government, through energy bills, pays the generator.

These strike prices are index linked to the prices set in 2012, so rise over time.

Of 12 projects granted guaranteed power prices in the latest auction, most ended up with a strike price of £74.75/MWh. Two very large offshore wind farm developers secured £57.50/MWh, one small energy from waste plant  operator took £40/MWh.



The auction results suggest that some developers are willing to take less generous price support than in previous years, as technology and development costs have fallen, supply chains matured and risks better understood, particularly for offshore wind.

Meanwhile, the auction was roughly five times over subscribed and renewables auctions elsewhere in Europe have also taken markets by surprise.  While markets are not directly comparable, offshore wind auctions in Germany earlier this year saw operators take prices of just a few Euros per megawatt.

The department for business, energy and industrial strategy (Beis) emphasised that offshore wind CfD rates agreed for delivery from 2022 were 50% lower than it agreed just two years ago.

Beis added that the support would help create and maintain jobs and hit carbon targets. The projects that secured support are set to start generating power from 2021/22.

See the results here.

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