New energy projects could power the equivalent of 11 million homes

After last September’s calamitous round of auctions for renewable energy projects, which attracted no bids for offshore wind at all, this year’s sixth round of auctions has produce much better results.

The latest auction round has seen 131 new green infrastructure projects make successful bids, including nine offshore wind contracts, securing what will be two largest windfarm projects in Europe: Hornsea 3 and Hornsea 4 off the Yorkshire coast.

ORE Catapult give a good explanation of how the Contracts for Difference system works: CfDs are 15-year contracts that the government signs with energy generators to fix the price they get for the energy they generate. If the market price of energy is lower than the “strike price” the generator is paid the difference, if it is higher the generator pays back the difference. The money for this subsidy comes from the Green Energy Levy on consumer bills.

No bids for offshore wind were submitted during the last round because the government had underappreciated how inflation had hit the industry, with the costs of deploying turbines estimated to have risen by around 40%, for a variety of reasons.

The previous government subsequently increased the ‘strike price’ considerably and the new Labour Government recently increased that by another 50%.

Energy Secretary Ed Miliband said: ‘We inherited a broken energy policy, including last year’s disastrous auction round which gave us no successful offshore wind projects.

‘Today we have now achieved a record-setting round for enough renewable power for 11 million homes, essential to give energy security to families across the country. It is another significant step forward in our mission for clean power by 2030 – bringing Britain energy independence and lower bills for good.’

Apart from the aforementioned  Hornsea projects, others to come on board this year include:  

• The largest floating offshore wind project in the world to reach market, Green Volt, which is double the size of Europe’s total installed floating offshore wind capacity
• Six new tidal projects, building on the UK’s world leading position, with just under half of the world’s operational tidal stream capacity being situated in UK waters
• A combined 115 solar and onshore wind projects, which is more than the total number of projects delivered in the last auction round  

RenewableUK’s Chief Executive Dan McGrail said: ‘The success of today’s auction sends a clear signal that the UK is back in the global race for clean energy investment. This wide range of projects, across technologies, are vital steps in building a clean, affordable energy system and reducing our dependence on expensive fossil fuels.

‘After the failure of last year’s offshore wind auction, it was essential that this auction succeeded and the fact that nine major offshore wind projects have secured contracts will increase investor confidence. There is intense global competition in offshore wind and the next auctions will be crucial for the UK.

‘The Government has set a world-leading clean power mission for 2030 and to meet that will need a big step-up from today. The industry stands ready to work with Government to make sure that we’re increasing the amount of new renewables coming through each year to the levels needed to meet the clean power mission.’