The UK is in a new era of cheap renewables after today’s Contract for Difference (CfD) auction results saw a record-low support price of under £40 per megawatt-hour, according to trade association RenewableUK.
Chief executive Hugh McNeal (pictured) said the £39.65/MWh clearing price in the auction meant offshore and onshore wind is now lower than the expected market price for power.
“These projects will provide cheap power to consumers and businesses for decades to come,” he added.
“Reaching that ‘zero-subsidy’ level is made possible by the certainty these long-term contracts provide.”
McNeal meanwhile said the nearly 5.8GW of new renewables capacity “is the biggest single step that the UK has taken towards meeting our net zero emissions target”.
“As these results show, offshore wind is the key technology for this country in tackling the climate emergency,” he added.
R-UK estimates the 5.5GW of CfD3 offshore wind projects will support over 7000 jobs across the six projects and attract up to £12.8bn of investment to the UK.
The projects would be of particular benefit to coastal communities “which are industrial hubs for the offshore wind sector in places like Grimsby, Hull, Teesside, Lowestoft, Great Yarmouth, the Isle of Wight and Aberdeen,” said McNeal.
The R-UK chief meanwhile voiced disappointment that tidal stream failed to secure contracts as they were not able to compete with the price of offshore wind and other successful technologies.
“We have to use every tool in the box to hit net zero emissions and so we are also urging the government to support onshore wind, as well as innovative renewable technologies like tidal and floating offshore wind,” he said.
Crown Estate Scotland head of energy and infrastructure John Robertson said: “Today’s announcement shows that costs continue to reduce and technological innovation continues to provide new opportunities in offshore wind.
“For Scotland, it supports the first phase of a project that will produce enough electricity to power over half a million homes, and underlines the potential of offshore wind to help achieve our climate change targets while bringing associated economic benefits to Scottish communities.”
Trade body WindEurope said the auction confirmed the UK as the leader in offshore wind in Europe.
WindEurope chief executive Giles Dickson said the country has the largest auction plans, with 2GW a year to 2030 and auction model.
He said: “The two-sided contract for difference: requiring wind farms to pay back the difference when the market electricity power exceeds the guaranteed price delivers the lowest overall societal costs.
“And they’ve the best model for government-industry collaboration with the wind industry committing to 27,000 jobs on the back of the government’s commitments on future auctions.
“Other European countries should take careful note as they finalise their offshore wind plans as part of their 2030 National Energy and Climate Plans.”
Dickson added that offshore wind is now the second cheapest form of new power generation in north-west Europe – behind onshore wind.
“The technology continues to develop. The supply chain continues to evolve. And it’s delivering huge volumes – this UK auction at 6GW is the world’s largest ever wind energy auction,” he said.
Orsted UK managing director Matthew Wright said: “The Contracts for Difference scheme is a fantastic example of a supportive Government framework that brings confidence to investors and the benefits of scale and certainty to the supply chain.
“With the incredible results of the most recent auction, offshore wind is now the cheapest major source of electricity in the UK.
“Our mission is to build a world that runs entirely on green energy so it’s great to see support for more of this clean technology in the UK, and we look forward to realising the government’s aim of at least a third of the UK’s electricity from offshore wind by 2030.”