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UK renewables auctions set record low price for offshore wind

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offshore windPV Magazine

Offshore wind is now cheaper than nuclear and gas in the U.K. following the second Contracts for Difference (CfD) subsidy auction that saw two developers win the rights to build offshore wind farms for just £57.50/MWh ($75.83/MWh).

This strike price – achieved by Denmark’s Dong Energy and Spain’s EDP – is 50% below the guaranteed development price for offshore wind set just two years ago, and is far cheaper than the £92.50/MWh agreed between the government and EDF for the nuclear power station at Hinkley Point.

The stunning performance of offshore wind and Advanced Conversion Technologies (ACT) in the auction prompted a flurry of calls from prominent voices for Hinkley Point C to be finally scrapped. The Green Party’s co-leader Caroline Lucas remarked that these record low prices for wind power should be a nail in the coffin for new nuclear.

“While clean, green wind power has the potential to seriously cut people’s bills – the government’s undying commitment to new nuclear risks locking us into sky high prices for years to come,” Lucas said.

The Renewable Energy Association’s head of policy and external affairs, James Court, added: “These results show that renewables are now the most cost-effective form of any energy generation, which can future-proof both the U.K. grid and provide sustainable new jobs in the U.K.”

Despite solar power being ‘blocked’ from competing in the auction after the government controversially labelled it a mature technology – much like onshore wind – the result should nevertheless compel ministers to commit to a low carbon industrial strategy, Court argued.

“Offshore wind’s success shows what can happen with government support, and consider that this auction was for so called ‘less established’ technologies.”

Leonie Greene, head of external affairs at the Solar Trade Association (STA), told pv magazine that the results demonstrate that offshore wind is now a mature technology and demonstrates the cost reductions the renewable sector can deliver when given stable, long-term policy framework and clear political commitment.

However, Greene lamented uneven playing field that remains stacked against solar. “It has been 2.5 years since solar was able to compete for a CfD contract, in which it secured the lowest price, which puts our industry at a competitive disadvantage,” she said.

“Having protected some technologies from competition with solar, it is clear government should now provide a level playing field and allow all clean technologies to compete. We are looking at pretty much a subsidy-free outcome for consumers at these sorts of prices. Government also needs to move faster to unlock barriers to storage and other forms of flexibility.”

The Department of Business, Energy, and Industrial Strategy (BEIS) confirmed that the total capacity awarded across three offshore wind projects was 3.2 GW, comprising the 1.4 GW Hornsea Project Two (Dong Energy), the 950 MW Moray Offshore project (EDP) and the 860 MW Triton Knoll farm (won by Germany’s Innogy for the slightly higher strike price of £74.75/MWh.

In total, the CfD auction saw 11 new energy projects awarded contracts, for a cumulative amount of subsidy of £176 million per year, taken from consumers’ electricity bills. “The offshore wind sector alone will invest £17.5bn in the U.K. up to 2021 and thousands of new jobs in British businesses will be created by the projects announced today,” said Richard Harrington, the minister for energy and industry at BEIS. “This government will continue to seize these opportunities as the world moves towards a low carbon future, and will set out ambitious proposals in the upcoming Clean Growth Plan.”

This article was originally published on PV Magazine. Reproduced here with permission

  

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  • Ren Stimpy

    Offshore wind needs to start making an appearance off of Sydney, Melbourne and Brisbane shores – be it more than 1 km out so that it’s hardly noticeable to the sensitive. Put it this way it’s either an effort to bring down the cost of world offshore wind with some effort towards demand, or a dead dead dead Great Barrier Reef. You choose.

    • Bristolboy

      To be “hardly noticeable” it will have to be much more than 1km out.

      • Ren Stimpy

        If the nearby sights sounds and smells of an overpopulated city don’t worry anyone I’m sure a few offshore wind farms won’t either.

        • Bristolboy

          I am just basing it on experiences elsewhere, for example Navitus Bay Wind Farm in England was rejected despite it the nearest turbine being 20+km from Bournemouth.

          1km is extremely close for the latest 15MW turbines being planned for the latest projects – these are expected to be at least 250m tall.

          Even ignoring planning, it is highly unlikely they will be so close to shore as economically it is best to install them in the more constant winds away from the coast, which is also away from turbulence.

          • Ren Stimpy

            No worries.

          • Ren Stimpy

            As Mark D said above which I didn’t know, you’re probably right.

            We need to get some floating wind turbines off of Sydney, Melbourne and (maybe not Brisbane but) definitely off of Newcastle and Wollongong. Sydney occasionally has some very large swells, so he’s right, wind turbines should be floated in deep water, tethered rather than driven into the bottom, and where huge ocean swells have minimal height capacity.

            http://www.bbc.com/news/business-40699979

    • Mark Diesendorf

      A study by Messali and Diesendorf (2009) found that the ocean is too deep for conventional off-shore wind turbines near Sydney and Melbourne (outside Port Phillip Bay), and wind speeds are too low around Brisbane. However, there is some conventional potential off-shore from the SWIS grid in WA, near Whyalla SA, Mackay Qld and Port Phillip Bay, Vic. Perhaps when/if floating wind turbines become commercially available and cheap, off-shore wind could become a possiblity for NSW and Vic.

  • Bristolboy

    Onshore wind and solar are still excluded from CFD auctions due to the UK government’s objections; if these were allowed to compete prices would be £30-£40/MWh.

  • Ian

    Why would you want to cover valuable land in Britain with solar panels when there are already numerous roofs and offshore wind is so abundant around that island? Australia is very much different in size , environment and climate and large scale solar is probably a good idea here, but Europe in general and The UK in particular covering green fields with large scale solar is , to my mind, sacrilegious.