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SSE Renewables secures 2.2GW of new offshore CfD contracts

Source: 
M2 PressWIRE

SSE Renewables is delighted to announce it has today, 20 September 2019, been successful in the UK's third Contract for Difference (CfD) Allocation Round and is set to be awarded 15-year contracts for low carbon power from offshore wind at record low strike prices.

Dogger Bank Wind Farms and Seagreen Phase 1 have secured CfDs for over 4GW (SSE share 2.2GW) of new renewable energy after a highly competitive auction. The strike prices of £39.65/MWh and £41.61/MWh show that offshore wind in particular is now one of the cheapest forms of electricity generation in the UK.

These consented projects will now receive guaranteed revenue for the low carbon electricity they generate for a 15-year period from the 2023/24 or 2024/25 auction delivery year. Outside the 15-year period, they will be an important asset with significant earnings capacity.

Today's results enhance SSE Renewables' position as the leading renewable energy company across the UK and Ireland.Once completed these projects will generate over 20TWh of green energy annually, equivalent to nearly 7% of the UK's current energy demand, making a significant contribution to the UK's net zero climate change targets and contributing to SSE Renewables' goal of trebling renewable energy output by 2030.

Jim Smith, Managing Director of SSE Renewables, said:

"I'm very proud SSE Renewables has been awarded contracts to deliver new renewable energy from offshore for the UK. These are by far the largest volume of low carbon contracts awarded in this CfD auction round and the biggest ever secured by SSE Renewables, confirming the company's position as the leading developer and operator of renewable energy across the UK and Ireland. Working with our project partners as well as the wider supply chain, we will now turn our focus in the months ahead to mobilising Seagreen and Dogger Bank towards financial close and construction.

"Achieved at record low prices with no additional cost to the consumer above forecast wholesale prices, these contract awards demonstrate the value for money that new renewable generation, and these projects in particular, represent to UK energy customers.

"Our success in this highly competitive auction strengthens our position as the leading developer, owner and operator of offshore and onshore wind across the UK and Ireland. It is an important achievement for our business and our partners, demonstrating our expertise in renewables development, and I would like to congratulate everyone involved in reaching this major milestone.

"Looking beyond this Allocation Round, we believe the UK Government must raise its ambition above 30GW of offshore wind by 2030. Only by doing so can the country set itself on the right path towards future carbon budgets and meeting the challenge set by Government to achieve net zero emissions by 2050."

SSE Renewables' successful projects in this CfD auction process are:

- Seagreen Phase 1, CfD for 454MW - located in the Firth of Forth off the Scottish coast, Seagreen has a total capacity of 1,075MW across its 'Alpha' and 'Bravo' projects and is expected to generate around 5,000GWh annually. The CfD contract represents 42% of the total project capacity although SSE Renewables is planning to build out the project to 1,075MW capacity. Wholly-owned by SSE Renewables, Seagreen Phase 1 is at an advanced stage of development and securing a CfD is a significant step in taking the project forward. Plans are in place to progress financing and an equity stake sell-down to move towards a final investment decision in early 2020. SSE Renewables will set out a further project timeline in due course.

- Dogger Bank Wind Farms, CfDs for 3,600MW (SSE share 50%) - located off the North East coast of England, this is a joint venture (JV) with Equinor in which SSE Renewables has a 50% stake. The following Dogger Bank Wind Farms projects have been awarded a CfD:

. Dogger Bank Creyke Beck A has been awarded a CfD for 1,200MW at a strike price of £39.65/MWh for delivery in 2023/2024

. Dogger Bank Creyke Beck B has been awarded a CfD for 1,200MW at a strike price of £41.61/MWh for delivery in 2024/2025

. Dogger Bank Teesside A has been awarded a CfD for 1,200MW at a strike price of £41.61/MWh for delivery in 2024/2025

- The successful Dogger Bank projects are each expected to generate over 5,000GWh annually. Following the outcome in the auction, SSE Renewables (with its JV partner Equinor) will now progress towards a final investment decision for all three projects by late 2020. SSE Renewables will lead the development and construction phases of the Dogger Bank Wind Farm project(s) and Equinor will lead on operations.

SSE Renewables was unsuccessful in securing a contract in this round for its onshore Viking Wind Farm project (up to 457MW) in the remote Scottish islands. This is an important project that will ultimately contribute to Scottish and UK zero-carbon goals and will also underpin a new transmission link to the remote islands, providing security of clean energy supply and transformative economic benefits to island communities. SSE Renewables is committed to delivering this project. Central to progressing this project is the result of Ofgem's consultation on Scottish Hydro Electric Power Distribution's proposed contribution towards the new transmission link for Shetland.

SSE Renewables already has an ownership share in 579MW of offshore wind around Great Britain and operates over 1GW of offshore wind at Beatrice and Greater Gabbard. Onshore, SSE Renewables has an ownership share in 1,995MW and operates over 2,500MW. Together with its 1,450MW of hydro-electric and pumped storage, it owns over 4GW of renewable energy assets.

SSE Renewables acknowledges that an application has been made by a third party against the Department for Business, Energy and Industrial Strategy (BEIS) for a judicial review in relation to the CfD auction process. BEIS has publicly stated that it will defend the claim. SSE Renewables continues to monitor the situation closely.

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