In excess of 3 GW of offshore wind capacity could be awarded in UK’s upcoming auction for renewable energy capacity, a leading consultant believes.
Qualification for the third allocation round (AR3) of contracts for differences (CfDs) low-carbon support scheme is due to commence on 29 May 2019.
As previously highlighted by OWJ, the Department for Business, Energy and Industrial Strategy (BEIS) announced that participants in AR3 would be competing for an annual budget of £60M (US$80M), with successful bidders expected to commission in 2023-24 and 2024-25.
The chart reproduced here highlights Cornwall Insight’s assessment of the maximum potential pipeline of capacity, by technology, that could enter AR3. The hatched white box represents the 6 GW auction cap, which could be met by offshore wind alone.
Cornwall Insight head of training Ed Reed said, “In capacity terms, offshore wind dominates with it representing just over 7.8 GW of the 10 GW of all the potential projects that could enter AR3. The remaining technologies represent a small fraction of the pipeline, with remote island wind the next largest by overall project capacity.
“Cornwall Insight’s initial analysis suggests, that 1.9 GW–3.2 GW of offshore wind capacity could be procured in the auction at the current administrative strike price levels of £56/MWh (US$74/MWh) 2023-24 and £53 MWh (US$70/MWh) 2024-25.
It has been suggested that the much-anticipated CfD auction could result in offshore wind that costs the government just £2/MWh (US$2.6/MWh).
Disappointment about the seemingly small sum allocated to the CfD has been tempered by analysis of how much capacity £60M (US$80M) might actually buy as costs continue to fall.
“Offshore wind has been able to benefit from great leaps in efficiencies with increased turbine size and larger individual projects all helping to boost outputs. As a result, this dominance should be of little surprise particularly when this sector has come out on top in previous rounds.
“Unfortunately, the scale of the offshore wind sector alongside its relatively low ASP in comparison to other technologies will see other sectors struggle to win a CfD.”