London. Ørsted and Iberdrola are among the successful offshore wind projects in Britain’s latest renewable energy tender, the government announced on Tuesday, a boost to the sector after an auction last year failed to secure any offshore wind projects.
The Labour government, which came to power in July, plans to decarbonise the power sector by 2030, which will require a huge increase in renewable energy capacity such as wind and solar.
Energy Secretary Ed Miliband said in a statement that Labour had “inherited a failed energy policy” and that Tuesday’s tender marked progress that would be consolidated.
The auction supported 131 wind, solar and tidal projects capable of generating almost 10 gigawatts (GW) of capacity, which would be enough to power around 11 million homes, Miliband said.
But analysts say the result is not enough to meet the country’s goal of expanding offshore wind capacity to 60 GW by 2030, up from 15 GW currently.
“Given that (next year’s seventh auction) is the last opportunity to acquire capacity before 2030, an additional 31 GW of offshore wind is needed to meet the target,” said Pranav Menon, a research associate at Aurora Energy Research.
Ørsted’s giant offshore wind project Hornsea 4 has won the largest contract by capacity, 2.4 GW.
Iberdrola also won contracts for its East Anglia Two and East Anglia Three offshore wind projects.
RWE UK chairman Tom Glover told Reuters it was positive to see offshore wind projects in the tender but was disappointed that two-thirds of “the pipeline of eligible projects” had been omitted when the government has said it wants to fast-track the sector.
RWE is developing the Norfolk Vanguard West and East offshore wind projects, which it bought from Vattenfall last year and which have a combined capacity of 2.8 GW.
The company did not confirm whether it had submitted them for the latest auction.
RWE was awarded contracts for a total of 218 megawatts of capacity across five onshore wind and solar projects.
Through the tenders, held annually, the government invites renewable project developers to bid for state-backed price guarantees for the electricity they produce, known as contracts for difference.
When wholesale electricity prices are below the minimum, the State covers the difference; if they are higher, producers return the difference to the State.
The fifth tender, held in 2023, did not attract any offshore wind projects, as developers considered the incentives offered to be too low.
In the sixth auction, held on Tuesday, contract prices for offshore wind power ranged from 54.20 pounds ($71.09) to 58.90 pounds per megawatt hour (MWh) at 2012 prices, according to government data.
Jefferies analysts calculated that this would be worth between £82.60 and £89.70 per MWh, at 2027 prices – when the first projects are expected to come online – if inflation is included.
UK spot electricity prices are volatile, but the TRGBBD1 daily contract is currently trading at around £92 per MWh.
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– 2024-09-07 22:13:47
