Floating wind farms need ‘ring-fenced’ subsidies

The development of floating wind farms in the UK will require ring-fenced support within the Contracts for Difference (CfD) mechanism, a new study has found.

Floating wind farms face a “foreseeable funding gap” due to the caps on the level of support available to offshore wind in future auctions, according to the research which was produced bythe Carbon Trust and the Offshore Renewable Energy Catapult.

“This funding gap will undoubtedly halt project development unless alternative finance instruments, such as a ring-fenced CfD pot, are accessible to projects,” said the report.  

Contracts for ‘less-established’ technologies, including offshore wind, will initially be capped at £105/MWh (2011-2012 prices) in future auctions, falling to £85/MWh by 2026.

“Introducing a ring-fenced budget for floating wind within CfD allocation rounds, similar to that which has historically been available for wave and tidal under the first CfD allocations, would provide revenue support which is commensurate with the maturity of the technology,” said the report’s authors.

Even if CfD support is not sufficient on its own, the study said it could be a “key enabler” should other revenues or funding become available. Accordingly, it urged the sector to seek grant support through the EU Innovation Fund and the Horizon 2020 DemoWind fund.

In order to encourage early trial projects, the report recommended that a de-risked demonstration site be developed with pre-approved consent and a grid connection offer in place.

Consenting for the projects which follow should allow developers to expand sites to host more turbines and give them a “flexible technology envelope” so they can make minor alterations and adopt cost-cutting innovations. There should be risk-based approach to consenting that “reflects the scale of the project, risk of the technology and sensitivity of the site” as well as “clarity on consenting timetables”.

As the most attractive locations for floating turbines are “largely in locations far removed from demand centres, namely in Scotland and south-west of England and Wales”, the report said adequate grid connections will be “critical”. It said there will need to be the “right regulatory framework” in place to enable sufficient investment in new grid infrastructure, particularly in transmission between the North and South of the UK, which currently suffers from “bottlenecks”.

“Floating wind presents a huge opportunity to unlock new markets for offshore wind by enabling areas with deeper waters and high wind resource to be accessed in a cost-effective way,” said Carbon Trust director of offshore wind Jan Matthiesen.

“However, there are a number of novel challenges that will need to be addressed in order to deploy floating wind turbines at commercial scale. The UK has led the world in fixed-bottom offshore wind and is now on the verge of securing a world leading position in floating wind, but continued support is critical to make this a reality.”

Hywind Scotland, the world’s first floating wind farm, is due to start operating by the end of 2017. Last week, the middle-eastern renewable investor Masdar Clean Energy bought a 25 per cent stake in the project.

The Energy Technologies Institute recently called for a greater focus to be placed on the development of floating foundations to help bring down the cost of offshore wind.