UK awards 7 GW of offshore wind, unveils grid plan to hit 50 GW
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UK awards 7 GW of offshore wind contracts; 1 GW onshore
The UK awarded subsidies to five offshore wind projects in England and Scotland for a total 7 GW of capacity in its latest renewable energy funding round.
The Round 4 auction of contract for difference (CFD) subsidies allocated only 0.9 GW to onshore wind projects as well as 0.6 GW to remote island wind projects and 2.2 GW of solar, the Department for Business, Energy and Industrial Strategy (BEIS) said July 7. All of the onshore wind projects are located in Scotland, highlighting how stricter planning rules in England have crushed activity.
Offshore wind contracts were clinched at a record low price of 37.35 pounds/MWh ($44.3/MWh) by Orsted, Vattenfall, Iberdrola's Scottish Power, a partnership between EDPR and Engie and a joint venture of Red Rock Power and ESB.
The projects are scheduled to be completed by 2026-2027 and the low prices come despite the soaring cost of raw materials such as steel alongside supply chain constraints following the coronavirus pandemic and Russia's invasion of Ukraine. Offshore wind costs have fallen as developers install larger, higher efficiency turbines and leverage deployment learnings and economies of scale. The last UK auction for contract for difference (CFD) subsidies in 2019 awarded 5.5 GW of new offshore wind projects at strike prices of between 39.65 and 41.61 pounds/MWh, some 30% lower than prices awarded in 2017.
The UK had 11 GW of offshore wind capacity online at the end of 2021 and is set to lead growth in Europe in the coming years. Last year, the government created new offshore wind freeports to increase manufacturing and logistics capabilities and in April it raised the national offshore wind target to 50 GW by 2030.
Forecast offshore wind installations in Europe in 2022-2026
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Source: WindEurope's Wind energy in Europe report, February 2022
The UK is also aiming to be at the forefront of floating wind development. Scotland has already allocated 15 GW of leases to floating wind projects and the Round 4 auction allocated CFDs to the 32 MW TwinHub floating offshore wind project in the Celtic Sea at a price of 87.3 pounds/MWh via a funding pot ringfenced for emerging floating wind technologies.
The Round 4 auction was the first opportunity for onshore wind and solar developers to bid for CFD subsidies since the government lifted a moratorium in place since 2015.
Ten onshore wind projects won contracts at a price of 42.47 pounds/MWh while six remote island wind projects won contracts at a price of 46.39 pounds/MWh. Over 60 solar projects gained contracts at a price of 45.99 pounds/MWh.
UK unveils plan for offshore wind grid to accelerate deployment
UK electricity system operator National Grid ESO has set out its plan for a coordinated offshore wind grid to fulfil the government's ambition of 50 GW of offshore wind by 2030.
To date, offshore wind farms have been directly connected to the shore via radial links but rapid deployment is raising onshore congestion risks. A coordinated offshore grid requires less offshore cables and allows simultaneous clusters of projects and would reduce transmission costs by some 5.5 billion pounds ($6.53 billion) compared with radial links, National Grid ESO said in its new Holistic Network Design (HND) plan published on July 7.
The HND plan includes the installation of 15 landing points for 18 offshore wind projects of total capacity 23 GW and new offshore transmission lines to transfer power south from Scotland to England and Wales.
Four subsea high-voltage direct-current (HVDC) links would connect the east coasts of Scotland and England to transfer power from projects allocated under the recent ScotWind tender. ScotWind allocated 25 GW of leases, including 15 GW of floating projects.
The grid plan also identifies 11 onshore transmission projects that must be accelerated to achieve the 2030 offshore wind goals.
UK grid plan to meet offshore wind targets
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Source: National Grid ESO's Pathway to 2030 report, July 2022.
“With over 7 billion pounds of investment in grid infrastructure in the north of Scotland alone, this blueprint can unlock Scotland’s vast offshore wind resources," Rob McDonald, Managing Director of SSEN Transmission, one of the UK's three electricity transmission owners, said.
“Key to accelerating delivery of this unprecedented programme of investment will be a robust regulatory framework that fast tracks regulatory approvals as a package of works, provides certainty of delivery, alongside reform of the planning system to expedite consenting," McDonald said.
Frank Mitchell, CEO of SP Energy Networks, said the UK government and energy regulator Ofgem are "prepared to consider new and more flexible ways in which the delivery of strategic infrastructure can be delivered, and we look forward to engaging with them further on this, in the coming weeks ahead."
A number of European countries are now developing offshore grid plans and new cross-border interconnectors to accommodate a surge in new offshore wind capacity in the coming years. Germany, the Netherlands, Belgium and Denmark recently unveiled a plan to build four artificial islands that transmit power and green hydrogen to multiple countries. The partners pledged to install at least 65 GW of offshore wind capacity in the North Sea by 2030 and 150 GW by 2050.
The UK will need to export power to achieve the government's target of 50 GW offshore wind by 2030 and offshore interconnectors could be installed in the North, Irish and Celtic seas, Nicola Medalova, Managing Director of National Grid Interconnectors, told Reuters Events last month.
National Grid has applied to UK regulator Ofgem to develop a framework for a pilot offshore interconnector within six months and install a fully commercial facility by 2030, Medalova said.
U.S. Supreme Court deals blow to Biden climate goals
The U.S. Supreme Court has hampered President Joe Biden’s plans to tackle climate change by ruling to limit the Environmental Protection Agency's (EPAs) authority to regulate greenhouse gas emissions from existing coal- and gas-fired power plants.
The conservative court's 6-3 ruling on June 30 restricted the EPA's authority under the Clean Air Act anti-pollution law in a case brought by the coal-reliant state of West Virginia.
President Biden aims to decarbonise the power sector by 2035 but there are no regulations in force to reduce carbon emissions from power plants and the EPA is currently working on a new proposal that is expected to come out next spring. Attempts by previous administrations have been blocked by federal courts. The Obama-era Clean Power Plan was blocked by the Supreme Court in 2016 and a less comprehensive plan by the Trump administration was blocked by a federal appeals court in 2021.
"While this decision risks damaging our nation’s ability to keep our air clean and combat climate change, I will not relent in using my lawful authorities to protect public health and tackle the climate crisis," Biden said in a statement.
"My administration will continue using lawful executive authority, including the EPA’s legally-upheld authorities, to keep our air clean, protect public health, and tackle the climate crisis. We will work with states and cities to pass and uphold laws that protect their citizens. And we will keep pushing for additional Congressional action," the President said.
The ruling comes after the Biden administration failed to gain support in Congress for the full range of climate change measures proposed in its Build Back Better budget reconciliation plan.
The Supreme Court's decision "highlights the need for swift congressional action on passing the climate provisions in the reconciliation package—which will move the nation forward on the path to cutting emissions in half by 2030 while achieving real energy independence, building good jobs, and lowering energy costs for consumers,” the American Clean Power (ACP) association said.
Reuters Events