Offshore wind has bounced back from a fallow 2023 with around 5.3GW securing backing in the latest Contracts for Difference round.
The results for AR6 show 4.94MW fixed-bottom capacity has landed deals from Pot 3, cashing out at strike prices between £54.23 and £58.87 per megawatt-hour, after price caps were lifted to £73/MWh in response to no projects succeeding in last year’s AR5.
There was also some success for floating wind with 400MW from Flotation Energy, Vargronn’s Green Volt clearing the auction at £139.93/MWh, well below the £176/MWh maximum available in Pot 2.
ScottishPower chief executive Keith Anderson said: “Offshore wind is back on track after last year’s misstep which is great news for consumers. The only solution to weaning the UK off volatile fossil fuels which are the root cause of increasing bills is more clean, green energy.
“This auction’s success shows this tried and tested investment mechanism, replicated globally, delivers exactly the scale of action needed, with billions of pounds to be pumped into the British economy replacing aging, polluting infrastructure.”
Orsted’s 2.6GW Hornsea 4 and ScottishPower Renewables’ 963MW East Anglia 2 wind farms both landed the higher fixed-bottom rate (£58.87/MWh) for delivery in 2028/29.
The remaining 1.58GW, which is slated for delivery in 2027/28, comprises ‘permitted reduction entries’ including 1.1GW capacity Orsted recycled and resubmitted from its AR4-backed 2.9GW Hornsea 3 wind farm.
The Danish developer’s deputy chief executive and chief commercial officer Rasmus Errboe said he was “pleased with the outcome of AR6”.
Orsted senior vice president and head of UK and Ireland Duncan Clark added: “”The important takeaway from this allocation round is that progress is being made, and it’s crucial that this momentum continues to grow. The Government has shown it takes renewable energy seriously, and we’re confident it will continue working with the sector to increase the volume of projects deployed in the UK.”
The other permitted reduction entries to land deals are 266MW from ESB, Red Rock Power’s 1.1GW Inch Cape, 73.5MW from Ocean Wind’s 882MW Moray West and 158.9MW from SPR’s 1.4GW East Anglia 3 wind farms, all off east England and Scotland.
Zoisa North-Bond, CEO of Octopus Energy Generation, said: “Offshore wind already generates 17% of the UK’s electricity and with Government targets to quadruple capacity, it will become the backbone of our energy future.
“It is set to deliver major knock-on benefits for the economy and unleash a new wave of green jobs and growth.
“The latest auction round with its hefty offshore wind allocation and the success of these projects agreed, is a loud and clear call for investors to keep backing Britain’s green energy revolution.”
Sam Hollister, Head of Economics, Policy and Investment, LCP Delta, added: “Offshore wind is set to be the heavy lifter for renewable generation, but this year’s auction only delivered 3.4GW of new offshore wind projects, with a further 1.5GW of existing projects already in the pipeline securing new contracts.
“This is well below the levels that were needed in this auction for the UK to reach its target of 55GW of offshore wind by 2030.
“Based on current timelines to bring projects on stream, next year’s AR7 and the following AR8 auction would each need to procure around 14GW of offshore wind (28GW in total).”