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UK Backs New Floating Wind, Tidal Projects in Subsidy Auction

hexicon
Illustration courtesy Hexicon

Published Jul 7, 2022 5:38 PM by The Maritime Executive

Hexicon AB's novel twin-turbine floating offshore wind system has secured the UK's first ever Contracts for Difference financial support package for a floating wind farm. 

The CfD award will support Hexicon's future TwinHub project in the Celtic Sea, a demonstration-scale 32 megawatt installation which will test out the potential of the company's two-turbine-per-platform technology. The Celtic Sea wind area has strong potential, and the Crown Estate has set a long term goal for the development of four gigawatts of power in the area. 

As part of the UK government's massive 11GW award round announced Thursday, the TwinHub project has been awarded a CfD at a strike price of about $105 per megawatt-hour. It is the first floating wind project to secure this form of support, and the only floating project in the auction round. The dollar value is substantially more than the CfD strike price for large bottom-fixed offshore wind projects like East Anglia 3, which came in at about $45.

Overall, the auction award round supports 93 different projects in England, Scotland and Wales - more than all three previous auction rounds combined.

"Thanks to today’s record renewable energy auction, we have secured almost 11GW of clean, home-grown electricity – which would provide as much power as around 6 gas fired power stations," said UK business and energy secretary Kwasi Kwarteng. "These energy projects already have planning permission, now they have a funding contract in place. We’re going to these projects built as soon as possible to better protect millions of British families from rising costs."

Four tidal energy projects secured remarkable levels of CfD support in the auction round, including Orbital Marine 1 and 2, Morlais Magallanes and MeyGen Phase 2. All are relatively small-scale, with MeyGen topping the list at 28 MW of capacity. In line with their early-stage developmental nature, these projects brought in a high level of support per unit, securing about $215 per megawatt-hour of output.

The CfD subsidy auction scheme has attracted significant interest in the UK’s renewable energy sector with private companies expected to invest a staggering $185 billion this decade. The UK government believes the competitive nature of the CfD scheme has pushed prices downward over the years: the unit price of offshore wind in the latest round was almost 70 percent less than that secured in the first round in 2015.

“Successive governments deserve credit for providing the regulatory and policy certainty for continued investment in offshore wind,” said Duncan Clark, Ørsted Head of Region UK.