By Chris Hopson and Karl-Erik Stromsta in London
Wednesday, December 04 2013
Updated: Wednesday, December 04 2013
The draft Contract for Difference (CfD) strike prices published by government this summer offered offshore wind projects £155 ($253) per MWh from 2014/15, dropping to £135/MWh in 2018/19.
Today, however, the government confirmed its intention to offer offshore wind projects £140/MWh in 2018/19, bending to industry concerns that the assumed cost-reductions for the medium term were too severe.
The £155/MWh starting point will remain in place for offshore wind, albeit during a period when developers can still choose to benefit the Renewable Obligation Certificates scheme, which will be phased out in 2017.
As no change will be made in the overall level of financial support offered to renewables, the government will make up the difference by lowering support for onshore wind and PV, which are deemed more mature technologies.
Onshore wind – which was initially to see support go from £100/MWh in 2014/15 to £95/MWh in 2018/19 – will instead see support drop from £95/MWh to £90/MWh during the four-year period.
Support levels for large PV – which were originally to go from £125/MWh in 2014/15 to £110/MWh in 2018/19 – will instead fall to £120/MWh to £100/MWh during the period.
Additionally, the government today announced that 16 renewables projects have been made eligible to apply for the CfD prior to its launch in late 2014.
Among the offshore wind projects included are SMart Wind's Round 3 Hornsea; Mainstream Renewable Power's 450MW Neart na Gaoithe; Repsol and EDPR's Inch Cape; and extensions at Dong's existing Burbo Bank and Walney projects.
Mainstream says the decision means it could reach financial close at Neart na Gaoithe in 2014 and enter construction in 2015.
The new strike prices “reinforce the UK’s position as … the number one place for business to invest in offshore wind generation", says Energy and Climate Change Secretary Ed Davey.
"Investors are queuing up to express their interest in these contracts. This shows that we are providing the certainty they need, our reforms are working and we are delivering ahead of schedule and to plan.”
Trade body RenewableUK praised the decision to boost support for offshore wind.
“It sends an important political signal that the government recognises the need to back this sector, if we are to attract big wind turbine manufacturers to the UK to open up factories,” says RenewableUK deputy chief executive Maf Smith.
The government today called 10GW of installed offshore wind capacity in 2020 an "achievable" goal, but tempered its remarks by pointing out that that figure is not an official target, and actual deployment will depend on cost.
Of the 10GW figure flagged up by government, RenewableUK's Smith says: “Industry can deliver this and more.”
The updated strike prices will pave the way for the UK to source 30% of its electricity from renewables by 2020, according to the government.
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