THE price of offshore wind power has fallen to a new record low, as the UK Government announced 11 gigawatts of winning bids for various renewable technologies.
The Government said it had secured a record amount of renewable power in its flagship auction scheme.
Companies have won the right to build 11 gigawatts (11GW) of on and offshore wind, solar and floating offshore wind and tidal energy.
That is enough to power around 12 million homes, according to officials.
ScottishPower won contracts for three offshore wind projects with a total of 1400MW, five onshore wind farms in Scotland with 396MW in capacity and 10 solar farms with 326MW in capacity.
Charlie Jordan, chief executive of ScottishPower Renewables, said: “This is a record result, almost doubling our capacity in one green swoop across three major technologies that will deliver the secure, green and affordable power generation this country needs for the future.”
He added: “We can’t wait to get started.”
The so-called contracts for difference (CfD) auction sets a guaranteed price that each project will be paid for every megawatt-hour (MWh) of energy it produces. This is called the strike price.
If the price of electricity on the open market is lower than that, subsidies will kick in to top up payments to companies.
But if the price is higher – as at the moment – companies will have to pay back the difference.
Yesterday, the cheapest offshore wind farms quoted a strike price of £37.35. The previous record low had been £39.65 – set in 2019.
By comparison, the strike price for the Hinkley Point C nuclear plant is £106.12.
The UK still gets a significant part of its electricity from gas power. As the price of gas soared over the last year, electricity prices have been trading above £150 per MWh, meaning many wind farms are returning cash to customers.
The price of renewable energy has fallen significantly over recent years.
The first CfD auction was run in 2015 and since then the price of offshore wind in the contracts has fallen by nearly 70%.
Onshore wind is also 45% cheaper than it was in the 2015 round – the last time that onshore wind and solar were eligible to be included.
For the first time, the auction included tidal stream technology, with 41MW set to be built, and floating offshore wind turbines, which will provide 32MW of capacity.
These more innovative technologies will be much more expensive, with tidal wind contracts at £178.54 per MWh and floating offshore wind at £87.30.
Business and Energy Secretary Kwasi Kwarteng said: “Eye-watering gas prices are hitting consumers across Europe.
“The more cheap, clean power we generate within our own borders, the better protected we will be from volatile gas prices that are pushing up bills.”
Most of the 11GW of new capacity will be built as wind farms off the coast of Britain. The 7GW of new offshore wind will increase the country’s capacity by 35%.
The Government is aiming to reach 50GW of offshore wind by the end of the decade to power its target of 95% electricity from low-carbon sources.
