EDF Renewables and Orbital Marine Power are among the projects successful in the Department for Business, Energy and Industrial Strategy’s Contract for Difference (CfD) auction round.
A record amount of renewable energy has been secured through the biggest ever round of the flagship auction scheme.
The fourth round secured almost 11GW across a range of clean technologies, including offshore wind, solar, onshore wind, and - for the first time ever - floating offshore wind and tidal stream.
CfDs give certainty to project developers to invest in new renewable energy infrastructure by protecting them from volatile wholesale prices. A unique benefit of the CfD scheme is that when wholesale electricity prices are high, as they have been in recent months, generators pay money back into the scheme to reduce the net costs of the scheme to consumers.
The competitive nature of the scheme has continued to place downward pressure on prices. The per unit (MWh) price of offshore wind secured in this round is almost 70% less than that secured in the first allocation round, in 2015.
EDF Renewables was successful with its Stornoway wind farm on the Isle of Lewis and Stranoch wind farm in Dumfries and Galloway. Together these onshore wind farms will provide 300MW of low carbon electricity.
EDF Renewables UK’s chief executive Matthieu Hue said" “It has been great to see onshore wind and solar included in the CfD auction as they are cost competitive and quick to build.
“We are disappointed our Blyth 2 project did not win a CfD as we firmly believe the project would be key to enabling more floating offshore wind projects. Our priority now will be to look at other ways to deliver this.”
Stornoway Wind Farm on the Isle of Lewis is a joint venture with Wood. The project has won a CfD for 200 MW capacity, the strike price was £46.39, the target commissioning date is 31 March 2027.
Stranoch wind farm has won a CfD for 99.96 MW capacity, the strike price was £42.47, the target commissioning date is 31 March 2025.
Meanwhile, floating tidal turbine company Orbital Marine was awarded two CfDs, underpinning the delivery of multi-turbine projects in Eday, Orkney.
Capable of delivering 7.2MW of predictable clean energy to the grid once completed, these Orbital tidal stream energy projects can power to up to 7,200 homes.
This outcome also means Orbital can make a transformative investment in its UK supply chain, with around 150 jobs expected to be created through the manufacture and installation phase alone.
Chief executive Andrew Scott said: “This award is an important validation of our pioneering technology and overall approach to-date.
“We will now build on our track record for financing pioneering projects, continuing to offer investors the opportunity to scale up a predictable and reliable new source of clean energy.
“The UK Government’s courageous decision to create a tidal ring-fence within the AR4 process was essential in getting us to this point. For industry-wide progress to be sustained, it is now vital that a long-term vision is created by government, along with similar ring-fence allowance in future allocation rounds.”
Peel NRE was successful in two bids: one for its Mossy Hill wind farm near Lerwick and the other for Beaw Field wind farm in Yell.
The 72MW Beaw Field wind farm received planning permission in 2017 – and will have the capacity to power around 80,000 homes a year.
Proposals for a 48MW capacity, 12-turbine wind farm at Mossy Hill were granted planning permission in 2019. This would generate enough electricity for around 50,000 homes each year.
Both schemes are due to be operational by 2026.
Rob Tate, development director for renewables at Peel NRE said: “This government support is excellent news to help secure the future of cleaner energy generation in Scotland and it moves us closer to the delivery stage of our two wind farms in The Shetlands.
“I’m pleased that both of our projects have been recognised and that we’re able to play our part in providing the infrastructure needed to scale up the country’s renewable efforts.”
Elsewhere, the Inch Cape Offshore Wind Farm will see up to 72 turbines located 15km off the Angus coast and connect to the National Grid at Cockenzie, East Lothian.
Once complete, it will be one of Scotland’s largest single sources of renewable energy and power up to one million homes with clean electricity. The project is a 50:50 joint venture between Red Rock Power Limited and Irish utility ESB.
Project director Adam Ezzamel: “This is an important milestone for the project, and testament to the great work of team which has completely re-engineered the wind farm over the last two years.
“Our focus now moves to the contracting of key work packages and progressing towards a final investment decision by the middle of next year.”
Onshore wind and solar energy were both included in a CfD auction for the first time since 2015. Onshore wind secured almost 0.9GW of new capacity, clearing at a per unit price that was more than 45% lower than in the first CfD round in 2015, while solar secured more than 2.2GW.
The fourth round also saw developing technologies tidal stream and floating offshore wind projects successful for the first time. Tidal stream returned a capacity of 41MW and floating offshore wind returned 32MW.
Overall, 93 projects with existing planning permission across England, Scotland and Wales have won contracts through the competitive auction process, which is more than in all three previous rounds combined.
CfDs are 15-year private law contracts between renewable electricity generators and the Low Carbon Contracts Company (LCCC), a government-owned company that manages CfDs at arm’s length from government.
The CfD fourth round had budget funding of £295m per year, at 2011-2012 prices. This saw £210m allocated to the pot supporting offshore wind projects, with £10m for established technologies and £75m for less-established technologies, including ring-fenced funding of £24m for floating offshore wind projects and £20m for tidal stream projects.
Business and Energy Secretary Kwasi Kwarteng said: "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.
"These energy projects already have planning permission, now they have a funding contract in place - so we’re going to these projects built as soon as possible to better protect millions of British families from rising costs."
RenewableUK deputy chief executive Melanie Onn added: "Thanks to the rapid construction times of new onshore wind and solar sites, billpayers will start to feel the benefits of today’s auction next year.
"Working closely with government, we need to make this country the most attractive place to invest in.
"This is particularly important if we want to develop our supply chain in new technologies like floating wind, tidal stream and green hydrogen, in which we can lead the global market and seize the export opportunities this offers."
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