UK awards contracts for 4.5GW
UPDATE 2: Statoil and Statkraft hail Dudgeon CfD as a 'milestone'
23/04/2014
The UK government has awarded early-stage Contracts for Difference to eight renewable energy projects totalling 4.5GW.
Five offshore wind farms have made the cut in DECC's final FID enabling process, including SSE and Repsol's 664MW Beatrice project off northern Scotland which previously missed out on the so-called "affordability shortlist".
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Others making the grade include Dong's 258MW Burbo 2 and 660MW Walney 3 in the Irish Sea. Also on the list are Statoil/Statkraft's 402MW Dudgeon and Dong/SMart Wind's 1200MW Hornsea 1 off the east coast of England.
Biomass projects complete the list, including Drax's 645MW conversion project in North Yorkshire, Lynemouth Power's 420MW conversion project in Northumberland and MGT Power's 299MW dedicated biomass CHP project on Teesside.
Total private sector investment in the projects will be £12bn and they will support 8500 jobs, according to DECC. They will combine to produce 14% of renewable power that DECC expects to come forward in the UK by 2020.
DECC secretary Ed Davey (pictured) said: "These contracts for major renewable electricity projects mark a new stage in Britain's green energy investment boom. They will bring green jobs and growth across the UK (and) they are a significant part of our efforts to give Britain cleaner and more secure energy."
The minister said he expects CfDs and the wider electricity market reform process to deliver 30% renewable electricity in the UK by 2020.
"These are the first investments from our reforms to build the world's first low carbon electricity market - reforms which will see competition and markets attract tens of billions of pounds of vital energy investment whilst reducing the costs of clean energy to consumers," he added.
Davey said the contracts awarded to the eight projects "are vital to give investors the confidence they need to pay the up-front costs of major new infrastructure projects".
Final investment contracts will be signed and laid in Parliament in May, when they will take legal effect. Two onshore wind farms withdrew from the original FID Enabling shortlist.
Dong Energy welcomed the news with chief exeutive Henrik Poulsen saying it “shows that the UK is an attractive place to invest in offshore wind, not only for its great natural resources but also because of the stable investment environment created by electricity market reform”.
Dong country chairman for the UK Brent Cheshire added: "These contracts will allow us to deliver over £5bn of investment in the pipeline of projects we have in the UK.
“They will enable continued growth and investment in the UK supply chain as well as making an important contribution to reducing the cost of offshore wind for the benefit of all consumers."
Development partners Statoil and Statkraft hailed the award for Dudgeon as a “significant milestone”. A spokesman for the project said: "We are proud to have been picked as one of the projects that is guaranteed 15 years of support.
“We continue to mature the project and somewhere between July and August we will make an investment decision.”
Meanwhile, RenewableUK deputy chief executive Maf Smith said he was pleased to see such a “vote of confidence” in the projects but added that “it’s important that the CfD regime works for all renewable projects, not just those that have secured early contracts”.
Image: RWE
