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Two Scottish renewables projects win contracts amid record-low auction prices

Rachelle Money

Director of Communications

Posted on 11/09/2017 by Rachelle Money

Scotland’s renewable energy industry received a welcome boost this morning (Sept 11) with an offshore wind project and biomass combined heat and power plant securing power contracts for a period of 15 years.

 

The Moray East Offshore windfarm, planned for the Moray Firth, has been awarded a contract in the Department for Business, Energy and Industrial Strategy’s second competitive clean power auction at a price substantially lower than previous auction rounds. The project is scheduled to start generating power in 2022/23.
 
The result was one of three UK offshore wind projects to win a Contract for Difference (CfD) in the auction, which together signalled a considerable drop in the cost of the technology –50% since the first auction in February 2015.
 
Grangemouth Renewable Energy Limited also received a CfD for its dedicated biomass with CHP plant, which will be delivered in 2021/22, at a price significantly lower than the Government’s administrative strike price.
 
The two projects, once built, will together generate enough electricity to power the equivalent of 1,136,100 homes.
 
Welcoming this morning’s results, Scottish Renewables’ Deputy Chief Executive, Jenny Hogan, said:
 
“The results of this latest auction are good news for Scotland, for our environment and for our energy system.
 
 “The cost reductions seen in offshore wind in particular have been dramatic and are testament to the determination of developers to drive down costs. The scale of innovation taking place across the sector and its growing supply chain show the importance of ensuring a viable, competitive route to market is available for clean power technologies.
 
“The biomass CHP plant at Grangemouth has also demonstrated significant cost reduction.
 
“However, onshore wind and solar are currently excluded from competing in Contracts for Difference auctions. The government has the tools to drive down costs even further and these technologies can and should be allowed to play their role in delivering the government’s own Industrial Strategy.”
 
Ms Hogan added: “We hope to see all renewable technologies getting the chance to bid in future auction rounds and to demonstrate just how cheap they can be.
 
“The Government must now set out in its Clean Growth Plan a clear plan for cutting emissions further from the UK’s energy system, and provide certainty to investors over the timing for further auctions rounds for all technologies.”
 
Offshore wind cleared at prices of £74.75 per megawatt hour (MWh) for projects which will begin generating power in 2021/22 and £57.50/MWh for those commissioning in 2022/23.
At these prices, offshore wind is now substantially cheaper than new nuclear, with Hinkley Point C awarded a power contract at a price of £92.50MW/h
 
Dedicated biomass with CHP cleared at a price of £74.75, against an administrative strike price of £115.
 
Notes to Editors:
 
1.    BEIS press release: ‘New clean energy projects set to power 3.6 million homes’ issued 11 September, available here
2.    The Contract for Difference auction results can be found here.