The UK government has awarded Contracts for Difference (CfD) to three offshore wind farms totalling 3.2GW, with a new record low of £57.50 per megawatt-hour set in the country.
Dong Energy secured support for the almost 1.4GW Hornsea 2 off Yorkshire while EDPR and Engie won a CfD for the 950MW Moray 1 off northern Scotland.
Both sites will come online in the 2022-23 delivery period at £57.50/MWh.
Innogy and Statkraft have also secured support with the 860MW Triton Knoll off Lincolnshire, which will come online in 2021-22 at £74.75/MWh.
All three winning projects will be built in three phases with first power coming in the initial year of the CfD contract.
Dong Energy UK managing director Matthew Wright said: “This is a breakthrough moment for offshore wind in the UK and a massive step forward for the industry.
“Not only will Hornsea 2 provide low cost, clean energy to the UK, it will also deliver high quality jobs and another huge boost to the UK supply chain.”
He added that successive UK governments should be given “great credit for providing the certainty for continued investment in offshore wind, enabling it to become the thriving renewable industry it is today”.
Dong said the allocation of the CfD means it has now taken the final investment decision to go ahead with the Hornsea 2 project.
The company added that it is already constructing the 1.2GW Hornsea 1 project and has started the consultation process for Hornsea 3.
Innogy director of offshore wind Paul Cowling said: “With these price reductions achieved, we now look forward to government announcing the dates for future auctions, to continue to drive further cost reductions both in offshore wind and across other technologies.”
Triton Knoll project director James Cotter said: “We will now progress towards financial closure in 2018 and construction start shortly after, and look forward to realising opportunities for regional and UK businesses, and to working closely with them in the months to come.”
EDPR chief executive João Manso Neto said: “This auction has demonstrated the real progress in cost reduction and our result shows how affordable offshore wind can be compared to other technologies, including new thermal generation.
“EDPR has demonstrated what can be done at this site. It is in the UK’s interests to enable us to continue this achievement at other sites.”
Engie CEO Wilfrid Petrie said the CfD award was an important step in taking the Moray 1 project forward.
Energy minister Richard Harrington said offshore wind will invest £17.5bn (€19.2bn) in the UK to 2021.
“Thousands of jobs will be created by the projects announced today,” he said.
“This government will continue to seize these opportunities as the world moves towards a low carbon future, and will set out ambitious proposals in the upcoming Clean Growth Plan.”
Biomass CHP and Advanced Conversion Technology projects secured support for 150MW.
Five advanced conversion technologies won contracts with strike prices of £74.75/MWh, while a sixth – the Redruth energy from waste project – won with a price of £40/MWh.
All the contracts are from 2021-22 apart from the Redruth facility which is from 2022-23.
Two biomass projects secured contracts for £74.75 starting in 2021-22.