UK offshore wind prices predicted to fall to 25 per cent less than Hinkley C – but it could still be done much cheaper! Offshore wind prices are plunging fast. A leading wind expert says that the next round of UK contracts awarded (next January) for offshore wind projects will undercut the price given to Hinkley C by around 25 per cent. Not only this but the contract length will be only 15 years for the offshore wind projects compared to the 35 years for Hinkley C. In Germany, meanwhile, the latest round of contracts for onshore wind are being issued at under £40 per MWh. The last Danish offshore wind project at Kriegers Flak was awarded a contract last December for under £44 per MWh (no more than £55 per MWh after taking into account grid connection costs). Gordon Edge, who served for over a decade as RenewableUK Policy Officer but who now runs an independent consultancy, is predicting that the ‘strike price’ awarded to wind projects will fall to around £70 per MWh. Not only this, but Edge believes that over 3GW of offshore wind contracts could be issued to fit in with the Government’s ‘budget’ for spending on power from new offshore wind projects. These prices are, however, calculated in 2012 prices as is done with the Hinkley C contract which is worth £92.50 in 2012 prices. This could mean that in this second round of ‘CfD’ (contract for differences) allocation (the first was in early 2015) all of the 3GW+ of offshore wind contracts could be in place by 2022/3. This would generate over 4 per cent of UK electricity supply, possibly as much as close to 5 per cent. Yet, the UK Government’s own method of procuring offshore wind has become the least competitive and most expensive procedure in Europe. Gordon Edge’s analysis reveals that in effect there are only three competitors in the race to pick up contracts under the current CfD round. And even in these cases the companies have been saddled with sorting out planning and site investigation details – details which in other European procurement regimes are dealt with by Government agencies. This process has also led to confrontations with RSPB over some Scottish offshore windfarm projects. On top of this the Uk Government is setting onerous rules about how and when the projects that gain contract should be deployed. All of this is in flagrant contrast to the freedom given to EDF to install Hinkley C. As I commented in my last blog post the Government needs to start the process of identifying new offshore wind sites
Dave Toke’s Blog 17th Aug 2017 read more »
