Offshore wind price hits record high at renewables auction

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The UK government has awarded the world’s largest renewable energy auction at a record price, aiming to help reduce the country’s dependence on fossil fuel prices and ease future energy bills amid global warming. cost of living crisis.

The UK government has announced 11 gigawatts of winning bids for various renewable technologies at a record price, sobtain a record amount of renewable energy in its flagship auction program.

The auction process secured almost the same amount of green power as the previous three rounds combined, which represents 14% of the UK’s current total electricity capacity and is enough to power about 12 million homes, officials say.

Nearly two-thirds of the auctions went to offshore wind, since five projects have secured 7 GW of new capacity. At £37.35 per megawatt hour, it is the lowest cost of any renewable technology and significantly cheaper than the current cost of electricity, which has traded at over £150/MWh for much of it of this year. The previous record was £39.65, set in 2019.

Overall, the record low prices will save consumers around £58 a year over the cost of electricity generated from gas, according to trade body RenewableUK.

“Exorbitant gas prices are hitting consumers across Europe,” said Business and Energy Secretary Kwasi Kwarteng. “The more clean, cheap electricity we produce within our own borders, the better protected we will be against gas price volatility that drives up bills.”

The Contracts for Difference (CfD) auction sets a guaranteed price that each project will be paid for for every megawatt-hour (MWh) of energy it produces. If the price of electricity on the open market is lower than this, the subsidies will intervene to supplement the payments to the companies. However, if the price is higher – as it is now – companies will have to refund the difference.

Over the past few years, the price of renewable energy has fallen by almost 70% since the first CfD auction in 2015. On the other hand, the price of gas has skyrocketed, which has is trading above £150 per MWh, which means that many wind farms are returning money to customers.

“Renewables are like the Swiss army knife of energy and climate solutions, so it’s great news for the planet and bill payers that the largest set of contracts has been awarded,” said Dr. Doug Parr, Scientist in chief of Greenpeace UK.

“The response to national energy security, by reducing climate-damaging emissions and reducing skyrocketing bills, makes it possible to invest in renewable energy and energy efficiency every time. The government must therefore create a flexible grid and change regulations to make cheaper, cleaner and more reliable renewables the backbone of our energy system.

For the first time, the auction included tidal turbine technology, with 41 MW to be built, and floating offshore wind turbines, which will provide 32 MW of capacity. These more innovative technologies will be much more expensive, with tidal wind contracts at £178.54 per MWh and offshore wind floating at £87.30.

Orsted, IberdrolaScottish power unit, Vattenfall AB and a project including AB Ignitis Grupe, EDP ​​Renovaveis and Engie were among the winners of the auction.

Some of the biggest projects in the bidding round include a massive 2.9GW site to be built by Denmark’s Orsted off the east coast of England and a new wind farm that will Vattenfall in Sweden will develop off the coast of East Anglia.

“This auction firmly positions the UK as a renewable energy superpower, accelerates the delivery of our climate targets and reduces our reliance on expensive imported gas,” said Danielle Lane, Country Director for Vattenfall in the UK. -United.

Bill payers are expected to start feeling the benefits of the auction next year, enjoying some relief from record energy costs brought about by the cost of living crisis and the war in Ukraine.

The auction is part of the government’s goal to reach 50 GW of offshore wind by the end of the decade, helping to meet its target of ensuring 95% of electricity comes from low-carbon sources.

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