By Andrew Lee in London
Wednesday, April 23 2014
Updated: Wednesday, April 23 2014
The projects offered CFDs – and 15-year guaranteed ‘strike prices’ for their power – are the first under the electricity market reform (EMR) process that will replace the existing support arrangements for large-scale renewables in a phased process over the next few years.
The five offshore wind farms are the 660MW Walney and 258MW Burbo Bank Extension projects owned by Dong Energy; the 400MW Dudgeon development of Norwegian duo Statoil and Statkraft; the 1.2GW Dong/Smartwind Hornsea project; and 664MW at the Beatrice project majority-owned by utility SSE.
Beatrice – a project in Scotland’s Outer Moray Firth – is offered a CFD despite being excluded from a shortlist of 10 deemed “provisionally affordable” in December by the UK Department of Energy and Climate Change (DECC).
That shortlist – which also bumped two other Scottish offshore wind projects from a previous long-list of 16 – caused friction between the UK administration and the devolved government in Scotland over renewables policy.
DECC said at the time that the final list could change, and two onshore wind farms on the shortlist of 10 were subsequently withdrawn by their developers.
Three biomass projects were also awarded CFDs today under the so-called Final Investment Decision Enabling (FIDE) process, in a move that will give developers a big boost in securing investment.
DECC said between them the eight will add up to 4.5GW of capacity and contribute roughly 15TWh of renewable power by 2020.
Dong said it was "delighted" with its trio of successful FIDE applications – but cautioned that the contracts are subject to approval by the European Commission under EU State Aid rules.
Trade body Scottish Renewables welcomed Beatrice's inclusion. Senior policy manager Lindsay Leask said: “Having received planning consent from the Scottish government in March, to now get an early Contract for Difference gives the Beatrice project the certainty of support we've been calling for from the UK government."
UK industry group RenewableUK also welcomed the offshore wind contracts, but said support for far more renewables projects will be needed.
"It’s important that the Contracts for Difference regime works for all renewable energy projects, not just those that have secured early contracts,” said RenewableUK deputy chief executive Maf Smith.
The UK expects to award more CFDs this autumn and is due to reveal more details of the allocation process – including the move to competitive awards – within the next few months.
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