A record-breaking wind generated energy capacity of 8.4GW plus, must be approved in the latest annual auction for licences (AR7) which opened today, if the UK is to meet its 2030 Clean Power target, warns Offshore Energies UK.
The previous annual rounds AR5 and AR6 failed to attract sufficient bids because the price on offer was too low for most bidders. Only one fixed wind and one floating wind project with a total capacity of 1.3 GW have been given a green light since AR4, building in a significant delay to UK wind energy generation forecasts.
A further delay in wind energy deployment has been caused by the fact that floating wind operators that do not have full planning consent have been barred from bidding in the AR7 auction.
Floating wind turbines are further offshore and attract less public opposition than fixed turbines and the UK supply chain is well positioned to develop this new technology which has a high growth potential.
The wind auctions are based on so-called contracts for difference (CfDs) which work by providing developers with a guaranteed ‘strike price’ for the electricity they create.
The mechanism provides a government-guaranteed price for the wind energy generated.
If the market price falls below the guarantee the government covers the difference and if it rises the wind turbine operators refund the extra to the government.
This helps to stabilise revenues for renewable energy projects which require very significant capital investment. It also reduces the risk associated with fluctuating wholesale electricity prices, and will provide more price stability for consumers.
Administrative Strike Prices (ASPs) have increased by 10% for fixed and floating offshore wind compared to last year’s AR6 auction.
ASPs represent the maximum price per MWh price for generating electricity – known as the strike price – that a project of a particular technology type can receive.
Thibaut Cheret OEUK wind energy manager said:
“We will be able to significantly increase wind-generated electricity by using the new generation of floating offshore turbines as well as fixed ones. Floating turbines can produce 25% more electricity and in future auction rounds the government should allow the same consenting flexibility to floating wind projects as it has done for fixed wind.
“The strike price involves a balancing act because it needs to be high enough to support the projects needed for CP2030 at the same time as controlling ultimate costs to consumers.
“We want to see the government continue to support the expansion of local supply chains for offshore wind farms with direct investment.
This investment can sit alongside schemes such as the Clean Industry Bonus which provides financial support for offshore wind developers on condition that they prioritise investment in areas that need it most, including traditional oil and gas communities.
This initiative will help to support highly skilled jobs such as engineers, electricians and welders across the UK”
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