UK Wind Power Sets Record Strike Price

Offshore Windfarms to Outprice Gas by 2023

The latest round of contracts awarded by the UK government for offshore windfarms has resulted in a record low strike-price, paving the way for the first subsidy-free offshore windfarms and making cheaper than gas power.

“Offshore wind is a British success story, with new projects at record low prices creating new opportunities for jobs and economic growth as we leave the EU,” said Energy and Clean Growth Minister Kwasi Kwarteng.

The remarkable improvements in offshore wind viability are expected to have a major impact for gas and hydrocarbon generation in the near term as costs bases radically decrease.

The UK has the largest installed capacity of offshore wind in the world, with about 8 gigawatts installed at the end of 2018. This is expected to rise to 10 gigawatts by next year, and even further as more projects start contributing power to the grid into the 2020s.

Contracts for Difference

The latest round of contracts, awarded under the Contracts for Difference (CfD) scheme, are a step change from the last round in 2017, which at the time set a record for renewable energy.

 “The costs of offshore wind are now around 30% lower than the second auction held in 2017,” the government stated, noting that CfD’s are now the “government’s primary method of supporting low-carbon electricity.”

CfDs are 15-year private law contracts between renewable electricity generators and the Low Carbon Contracts Co., or LCCC, a government-owned company.

Strike Prices Hit £39.65 /MWh

The latest projects are mainly concentrated in an area known as the Dogger Bank, located 60 miles offshore in the North Sea. Four projects there will generate 5 gigawatts of capacity at a strike prices as low as £39.65 per megawatt/hour (MWh) from 2023 to 2024.

“Twelve new renewable energy projects will be powering more than 7 million homes at record low prices, thanks to the latest round of the government’s flagship Contracts for Difference scheme,” the Department for Business, Energy & Industrial Strategy said.

The department states that the UK low-carbon economy could grow four times faster than rest of the economy out to 2030 and could deliver between £60 billion and £170 billion in exports by 2030.