Energy Estuary’s huge boost with double CFD-Day success
18th September 2017
TWO huge offshore wind projects out of the Humber Estuary have today been granted subsidy support, as the price of generating energy this way dropped momentously.
Triton Knoll and Hornsea Project Two have both won Contracts for Difference to generate green electricity in a multi-billion pound wind farm windfall for the area and the industry.
The first, from Innogy and RWE Statkraft, will be for 860MW, and is to be built in three phases, with the first in 2021/2022. The Triton Knoll team has underlined its intention to use Able Marine Energy Park at North Killingholme as a construction port / assembly base.
Hornsea will be the fourth offshore wind farm from Dong Energy to operate out of Grimsby, with Hull likely to be used for construction and assembly. It comes in at 1,386 MW, 400MW lower than the 1,800MW initially envisaged, and will also be built out in three phases, from 2022/2023.
Minister for Energy and Industry, Richard Harrington, said: "We’ve placed clean growth at the heart of the Industrial Strategy to unlock opportunities across the country, while cutting carbon emissions.
"The offshore wind sector alone will invest £17.5bn in the UK up to 2021 and thousands of new jobs in British businesses will be created by the projects announced today. This Government will continue to seize these opportunities as the world moves towards a low carbon future, and will set out ambitious proposals in the upcoming Clean Growth Plan."
MORE: Energy Estuary's huge boost with double CFD-Day success
Dong Energy's development has a strike price of £57.50, staggeringly below the £140 mark some of the first built out of the Humber were awarded. Triton Knoll came in at £74.75. Both are well below the Hinkley Point strike price. It underlines the huge strides taken and falling price as the industry matures.
Maf Smith, deputy chief executive of trade body RenewableUK, who hails from Barton, said: "It's great to work for an industry which meets and exceeds expectations as standard."
Confirming a final investment decision has been taken with the awarding of the CfD for Hornsea Project Two, Samuel Leupold, executive vice president and chief executive of wind power at Dong Energy, reflected on what will not only become the world's largest again, but the lowest costing wind farm in the UK too.
The strike price is half of that in the previous round of CfD allocations just two years ago.
"We’re delighted to be awarded a Contract for Difference for Hornsea Project Two, which is another important step towards fulfilling our vision of making offshore wind the most competitive form of electricity generation," he said.
“We have always promoted size as a key driver for cost. The ideal size of an offshore wind farm is 800 to 1,500MW, and therefore it is natural that Hornsea Project Two will deliver record-low costs to society. At the same time, the low strike price demonstrates the cost saving potential of developer-built offshore grid connections, which in the UK is included in the project scope.
“We remain fully committed to financial discipline, and Hornsea Project Two will be value creating to our investors.”
It will power more than 1.3 million UK homes, and in doing so surpass Hornsea Project One, currently in early stages of build out onshore. Hornsea Project Two will be built 89 kilometres from the Yorkshire coast and is expected to be operational from 2022.
Matthew Wright, managing director for Dong Energy UK, said: “This is a breakthrough moment for offshore wind in the UK and a massive step forward for the industry. Not only will Hornsea Project Two provide low cost, clean energy to the UK, it will also deliver high quality jobs and another huge boost to the UK supply chain.
“Successive governments deserve great credit for providing the certainty for continued investment in offshore wind, enabling it to become the thriving renewable industry it is today. Costs are falling rapidly, long-term and highly-skilled jobs are being created across the North of England and the UK supply chain is going from strength to strength. We’re now really seeing the benefits of this commitment to offshore wind and there is still so much more to come. Indeed, it has the potential to play a key part in the realisation of the UK’s industrial strategy.”
For Triton Knoll, to be built off the Lincolnshire coast - where it all began for the Humber's burgeoning industry a decade ago - project joint owners Innogy and Statkraft said today’s success was excellent news for both consumers and the renewables industry, and called for more auctions in future to help secure the accelerating trend of cost reductions in offshore wind.
It will see investment of around £2 billion into UK energy infrastructure. It is looking at a financial investment decision next year, and if positive - as would be anticipated this far in - full onshore construction would start shortly after, and offshore construction in 2020. First energy generation could be as early as mid-2021, with the project expecting to be fully operational in 2022.
Peter Terium, chief executive of Innogy SE, said: “Together with our partner Statkraft, we have passed an important milestone on the way to realising our offshore wind power project and also proved that we can be successful in a very competitive market environment. A large proportion of our planned investment in growth is intended to flow into renewable energies. Together with our grid and retail businesses, they will make innogy the innovative, decentralised and sustainable energy company of the future.”
His equivalent at Statkraft, Christian Rynning-Tønnesen, said: “We are delighted with the successful outcome for Triton Knoll in the CfD auction, which demonstrates the combined expertise of the two partners. As Europe’s largest generator of renewable energy, Statkraft plays a substantial role in driving forward developments in the renewables industry both in the UK and other markets around the world. Our strong partnership with Innogy has helped bring forward a cost competitive project that represents value for UK consumers, alongside ensuring future energy security. Investors will now be invited into the project.”
Paul Cowling, Innogy's director of offshore wind, said Triton Knoll’s auction success reinforced the downward trend of offshore wind costs, and called for more auctions in future.
He said: “Triton Knoll will provide low cost, clean sustainable energy for consumers and UK businesses, that is cheaper than nuclear and competitive with new build gas generation. Cost reduction is at the heart of offshore wind development and is accelerating faster than ever. The importance of offshore wind in the UK’s energy mix is now beyond doubt. Wind energy should be at the very core of UK Government’s energy policy and our long term energy security.
“With these price reductions achieved, we now look forward to Government announcing the dates for future auctions, to continue to drive further cost reductions both in offshore wind and across other technologies.”
For project director James Cotter, today is a key day, more than 10 years in the making. The 'face' of Triton Knoll at regional and national events, he said: “Triton Knoll will be one of the most cost effective wind energy projects in UK waters, delivering an expected minimum of at least 800,000 homes of sustainable, renewable energy. It will benefit local and UK businesses as we aim to deliver around 50 per cent UK content from our investment across the project’s lifecycle, and can help nurture skills for the future.
“Throughout, we’ve worked closely with our supply chain partners prior to our bid to ensure that, not only do we have a highly competitive project, but one that is highly deliverable and ready to go for the benefit of UK consumers. We will now progress towards financial closure in 2018 and construction start shortly after, and look forward to realising opportunities for regional and UK businesses, and to working closely with them in the months to come.”
Regionally, preparations for Triton Knoll’s start of onshore work are well underway, and a full programme of onshore survey works is being completed, while some key early works are being prepared to pave the way for construction later.
News Courtesy: www.humberbusiness.com