Offshore Wind Wins Big
Offshore wind won 5.5GW of the 6GW of new renewable energy capacity awarded. The average winning price for offshore wind was EUR 46.16/MWh including grid connection, the lowest prices yet for offshore wind in the UK.
The winning bids include 3.6GW of windfarms at Dogger Bank (by Equinor and SSE) and Innogy’s 1.4GW Sofia windfarm. Prices for offshore wind in the last UK auction round in 2017 were EUR 64.48/MWh. In 2015 they were EUR 131.35/MWh. The auction is based on a 2-sided Contract for Difference (CfD) model where the state guarantees windfarms a strike price for their electricity for fifteen years. If the wholesale power price is below the strike price the state pays the windfarm the difference. When it’s above, then the windfarm pays the difference to the state.
WindEurope CEO Giles Dickson says, “The cost of offshore wind continues to fall – now to below EUR 50/MWh including grid connection. Offshore wind is now the second cheapest form of new power generation in NW Europe – behind onshore wind. The technology continues to develop. The supply chain continues to evolve. And it’s delivering huge volumes – this UK auction at 6GW is the world’s largest ever wind energy auction. This auction also confirms the UK’s position as the leader in offshore wind in Europe. They have the largest auction plans: 2GW a year to 2030. They’ve the best auction model, the 2-sided Contract for Difference: requiring windfarms to pay back the difference when the market electricity power exceeds the guaranteed price delivers the lowest overall societal costs. And they’ve the best model for government-industry collaboration with the wind industry committing to 27,000 jobs on the back of the Government’s commitments on future auctions. Other European countries should take careful note as they finalise their offshore wind plans as part of their 2030 National Energy & Climate Plans.”