By Paul Homewood
From the The Times:
The government has slashed the financial support on offer for new offshore wind farms, forcing developers to find further cost savings if their projects are to proceed.
Claire Perry, the energy minister, said that the government aimed to “secure more energy from renewables for less” after announcing that it would award subsidy contracts worth up to £60 million a year to new projects through an auction in May.
The budget is barely a third of the value of subsidies awarded via the last auction in 2017, when wind farms with a capacity of 3.2 gigawatts got the go-ahead. The government said that it expected the reduced budget to be able to deliver more wind farm capacity than last time, of about four gigawatts.
The maximum price that new offshore wind farms will receive for the electricity they generate will be at least 40 per cent lower than the price for power from the Hinkley Point C nuclear plant.
Writing for The Times website, Ms Perry said the auctions would “make the UK a beacon for inward investment and provide the private sector with the certainty it needs to invest”.
Successive governments have backed the development of wind farms to mitigate climate change. Last year offshore wind turbines generated just over 6 per cent of the UK’s electricity needs.
Britain has almost 2,000 offshore wind turbines, capable of generating almost eight gigawatts of power when generating at full tilt. Projects capable of generating about another six gigawatts are under construction or are contracted to start generating by 2022-23. All have been made commercially viable with subsidy schemes set up by the government and paid for through consumer energy bills.
The government has said that it could support up to another two gigawatts being built each year through the 2020s and yesterday it set out details of how it would award subsidies for the next projects. It said that offshore wind projects starting up in 2023-24 would be entitled to a maximum price of £56 per megawatt-hour, falling to £53 per MWh for projects in 2024-25.
That compares with the guaranteed price of £92.50 per MWh for Hinkley Point C, which is slated to start in 2025, and £57.50 per MWh for the cheapest offshore wind projects awarded contracts last year.
It also underscores the dramatic cost reduction in the offshore wind industry in recent years, since early projects were criticised for high subsidies. The world’s largest offshore wind farm, the 660-megawatt Walney Extension off Cumbria, received a contract in 2014 that guaranteed it a price of £150 per MWh.
All the contract prices cited are expressed in 2012 money and are index-linked to inflation, so the actual price that developers receive will be higher.
https://www.thetimes.co.uk/edition/business/subsidy-cut-deals-blow-to-wind-farms-r7q9f3gzn
There was considerable doubt expressed at the last auction round as to whether the price of £57.50/MWh for two projects, Moray and Hornsea 2, was actually sustainable. For instance, Hornsea benefitted from piggy-backing onto the existing infrastructure of the first phase, helping to save on cabling costs.
It will be interesting to see whether the government gets any offers at all at the price they want.
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November 21, 2018 at 06:06AM
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