Weekly Intelligence Brief: Feb 23 – March 3, 2015
Offshore wind energy costs drop ahead of schedule
By Ritesh Gupta
Weekly Intelligence Brief: Feb 23 – March 3, 2015
Companies mentioned: The Crown Estate, Offshore Renewable Energy (ORE) Catapult, Department of Energy & Climate Change, ScottishPower Renewables, East Anglia ONE, Vattenfall, Mainstream Renewable Power, Neart na Gaoithe offshore wind farm, Energinet.dk, Kriegers Flak offshore wind farm, Humber Gateway Offshore Wind Farm
Offshore wind energy costs drop ahead of schedule
A report released in the United Kingdom has indicated that the cost of energy from offshore wind farms has fallen by almost 11% over the past three years, ahead of schedule on its path to delivering the UK Government’s target of £100/MWh by 2020.
The Cost Reduction Monitoring Framework (CRMF) report, delivered by the Offshore Renewable Energy (ORE) Catapult in collaboration with The Crown Estate, provides analysis of data gathered by Deloitte and DNV GL from offshore wind farms in UK waters.
It shared that the lifetime cost of energy from offshore wind has come down from £136/MWh in 2011 to £121/MWh for projects moving to construction between 2012 and 2014.
The biggest single contribution to cost reduction has been industry’s early adoption of larger turbines. 6MW machines are now being rolled out, compared to the 3MW turbines that were standard until recently.
The report shows that continued innovation and cost reduction depends on the scale of growth planned for the sector. It states that “whilst progress has been made in the face of a reduced deployment outlook, it is not safe to assume that the supply chain will continue to invest in the required technology innovations if the size of the market is not sufficient.
Minister for Energy Matthew Hancock said, “We’ve created the right conditions for significant levels of investment and are now seeing costs come down towards the target of £100/MWh – and with the potential to go further still.”
17 wind projects awarded subsidies through DECC auction
The Department of Energy & Climate Change (DECC) in the United Kingdom has shared that competitive auctions have led to contracts being offered to 27 renewable electricity projects.
The development has resulted in over £315m of new contracts being offered to five renewable technologies, including offshore wind.
The contracts being offered include two offshore wind farms, which could deliver over 1.1GW of new capacity, and 15 onshore wind projects.
Contracts were awarded to two offshore wind farms, one in England and one in Scotland: East Anglia Phase 1, and Neart na Gaoithe, a total of 1162 MW capacity, with strike prices of £119.89 and £114.39 per MWh, respectively.
The details of the CFD Auction Allocation Round One are as follows - a breakdown of the outcome by technology, year and clearing price.
In total, over 2GW of new capacity could be built, costing £110m per year less than it would have without competition, according to DECC.
This is the first allocation round for CFDs. Available funding for CFDs for renewables and carbon capture and storage in future years will could rise to over £1bn per year by 2020/21.
The budget for the next allocation round will be confirmed later this year.
ScottishPower bags East Anglia ONE CfD
ScottishPower Renewables (SPR) has secured a Contract for Difference (CfD) in the completive competitive auction process run by the UK Government to take East Anglia ONE forward.
The company stated that the development signals a major industry breakthrough in efforts to reduce the costs of offshore wind.
The successful bid was announced last week as the shareholders work towards ScottishPower Renewables’ purchase of Vattenfall’s 50% share in East Anglia ONE.
SPR will take the project forward initially as a 714 MW development after winning the auction with a price of £119/MWh.
The development will see around 100 wind turbines installed in the southern North Sea. The overall investment will be in the region of £2bn.
East Anglia ONE has planning consent for up to 1,200MW, and ScottishPower Renewables may still seek to build out the full project by securing further capacity in future CfD auctions.
The East Anglia ONE project will be developed solely by ScottishPower Renewables. Vattenfall and ScottishPower Renewables will continue to develop the rest of the East Anglia zone.
Mainstream secures CfD from National Grid
Mainstream Renewable Power has secured a 15-year Contract for Difference (CfD) from National Grid for its 450 MW Neart na Gaoithe offshore wind farm located in the Outer Forth Estuary in the North Sea.
The company highlighted that the contract gives the wind farm an inflation-linked strike price for the electricity it produces for a period of 15 years.
The wind farm, which was awarded planning consent in October last year, is expected to be generating electricity and fully commissioned by 2020. Mainstream will sign the CfD contract next month and will then proceed towards a Final Investment Decision in Q1 2016.
Funding for the project is well advanced, having pre-qualified for the Infrastructure UK Treasury Guarantee and the new €315bn European Fund for Strategic Investments. The company will make lead bank appointments in the coming weeks.
ABB awarded$100m contract
Power and automation technology group ABB has bagged an order worth over $100m from Energinet.dk, the Danish transmission system operator.
The contract was awarded to build an alternating current (AC) cable system that will enable the integration and transmission of power from the Kriegers Flak offshore wind farm to the mainland grid.
ABB’s cable system will connect the offshore wind farm platforms Kriegers Flak A and B to Rødvig, in Denmark.
The company will design, supply and install three high-voltage alternating current 220 kilovolt three-core submarine cables with a total length of about 100km – 44 km from each of the platforms to shore and 11 km between the two platforms.
The project is scheduled to be commissioned in 2018.
E.ON launches £2m Community Benefit Fund
E.ON is launching a £2m fund for its Humber Gateway Offshore Wind Farm, which is set to benefit local communities in the East Riding of Yorkshire and Grimsby.
E.ON has now identified four key areas that will benefit from the Humber Gateway Community Fund, which include improving rural transport in South Holderness; supporting the development of a new apprenticeship programme in North East Lincolnshire; funding for a new visitor centre for the Yorkshire Wildlife Trust; and a community support fund which local groups, voluntary organisations and registered charities can apply.
The Humber Gateway Wind Farm is located 8km off the Holderness coast, East Riding of Yorkshire, and will have an installed capacity of up to 219MW.
The wind farm recently generated electricity for the first time and is on schedule to be fully operational by mid-summer.