Race Bank misses early UK CfD nod
UK utility Centrica is “disappointed” that its consented 580MW Round 2 Race Bank project off the Norfolk coast has been rejected by the UK government as one of the first wave of new energy projects to qualify for higher levels of subsidies.
A Centrica spokeswoman tells Recharge that “we are disappointed that Race Bank has not been included as one of the projects that are eligible to receive an early Contract for Difference (CfD)” under yesterday’s government announcement.
“We continue to believe that Race Bank is one of the best consented offshore projects in the UK and will work with the Department of Energy & Climate Change (DECC) to understand why Race Bank did not meet the criteria to receive the final investment decision enabling contract,” she adds.
Analysts claim the decision places new doubt on whether the project will go ahead. This summer Centrica went on the record stating that the draft CfD prices for offshore wind – £155 ($248) per MWh in 2014/15 before falling to £135 per MWh in 2018/19 – were not high enough to prompt an investment at Race Bank.
The government yestersday announced an increase to the level of subsidies that will start operating in 2018-2019. However, Centrica’s Race Bank was not among the 16 projects chosen as one the early stage investments, making them eligible for subsidy contracts before the Energy Bill becomes law.
The 16 projects to qualify includes three offshore wind farms proposed by Dong Energy – including the Hornsea project – plus coal-to-biomass conversion projects by Drax and Eggborough power stations.
DECC says the successful projects had been selected against criteria to make sure they were technically and financially viable, and would contribute to wider industry development.
Centrica has been exploring options, including seeking financial partners for Race Bank. However, it had previously said it could make no decision on the project until the final CfD strike prices were revealed.
Centrica had already emerged at the centre of a row between UK offshore wind developers insisting that the draft CfD prices were too low, and a government with scant political room for manoeuvre when it comes further financial support for renewables.
In February Centrica said it would commit a maximum £200m to Race Bank, despite the project’s estimated £1.5bn price tag.
Industry body Renewable UK says the increase in subsidies for offshore wind announced yesterday would enable more Round 3 projects to be built.