The department of energy and climate change (DECC) believes that by 2020, the projects will provide up to £12bn of private sector investment, supporting 8,500 jobs. Furthermore, they could add 4.5GW of low-carbon electricity to Britain’s energy mix.
Once built, the successful projects will contribute around 15TWh or 14 per cent of the renewable electricity expected to come forward by 2020, helping the UK to meet its renewable energy targets. They will also reduce emissions by 10 MtCO2 per year compared to fossil fuel power generation.
The projects – including the 664MW Beatrice offshore wind farm in Scotland; Drax Unit #1 biomass conversion in Selby, Yorkshire; and the 299MW Teeside biomass with combined heat and power project in Middlesborough - have been offered under Contracts for Difference (CfD), which form part of government’s Electricity Market Reform programme.
In a statement, energy and climate change secretary Edward Davey said: ‘These are the first investments from our reforms to build the world’s first low carbon electricity market - reforms which will see competition and markets attract tens of billions of pounds of vital energy investment whilst reducing the costs of clean energy to consumers.
There has been significant growth in renewable electricity sector with the renewables’ share of total electricity generation more than doubling since 2010. The government expects this growth to continue through Electricity Market Reform and further expects to deliver over 30 per cent renewable electricity in 2020.
The eight successful projects have been awarded contracts under the Final Investment Decision (FID) Enabling for Renewables process, allocating the first CfDs that are being introduced through the Electricity Market Reform programme. Under CfDs, generators and developers receive a fixed strike price for the electricity they produce for 15 years. The contracts are supported by the new legislative framework introduced through the Energy Act 2013.
Dong Energy is developing three offshore wind projects – the Burbo Bank extension (South Irish sea), Hornsea1 (100km kilometres from the coast of Grimsby), and the Walney Extension (East Irish Sea) – that were included in today’s announcement.
‘We are delighted that we have been successful with all three of our FID contract applications we submitted to the UK Government,’ said Henrik Poulsen, CEO of DONG Energy. ‘These awards represent the successful conclusion of the Electricity Market Reform (EMR) process that has been ongoing over the last few years. It shows that the UK is an attractive place to invest in offshore wind; not only for its great natural resources, but also because of the stable investment environment created by EMR.’
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