Offshore wind pipeline now stands at 86GW

Research published by Renewable UK has revealed that the total pipeline of UK offshore wind is now more than eight times current operational capacity at 86GW.

The pipeline includes projects which are fully operational, under construction, consented, in the planning system or being developed for submission into planning.

Renewable UK said the latest figure represents a 60% increase over the past year, which has been mainly driven by the awarding of seabed rights to 8GW of generation in the Crown Estate’s fourth offshore leasing round and 24.8GW in Crown Estate Scotland’s ScotWind leasing round.

The trade body’s Energy Pulse report also showed that the total global offshore wind pipeline has reached 517GW.

While China (24GW) has more fully operational capacity than the UK (10.5GW), the UK’s total pipeline is bigger than China’s 75GW. The USA is in third place with 48GW in its pipeline.

Renewable UK chief executive Dan McGrail said: “It’s clear that offshore wind will be doing the heavy lifting as we secure our clean home-grown energy supplies and move faster towards independence from unstable fossil fuel imports.

“The global offshore wind market is also continuing to grow at a phenomenal rate with an extra 200GW added to the pipeline over the last year.

“As the UK was an early mover in offshore wind, we’re in a prime position to capitalise on our expertise as a market leader which is highly sought after worldwide.”

Meanwhile, ERM Dolphyn and Source Energie have unveiled plans to develop 2GW of floating wind generation in the Celtic Sea to produce green hydrogen. They said the first site under development, called Dylan, is located approximately 60km off the Pembrokeshire coast and has a target deployment date of 2027/28.

Steve Matthews, commercial director for ERM Dolphyn, said: “Areas of deep water around the UK and Ireland provide great opportunities to generate green hydrogen at scale, and to deliver this carbon free fuel to areas of emerging demand, where it can be used as an alternative to fossil fuels.

“Following on from our projects in Scotland and the North Sea, Dylan is an important additional step, which will help decarbonise areas around the Celtic Sea region, including South Wales. We are delighted to be working with Source Energie on this exciting prospect and very grateful for the support provided for Project Dylan by the Welsh Government.”

Contracts for Difference

In other news, a new report by the centre right think tank Onward has suggested that Contracts for Difference (CfDs) could be paying back almost £10.5 billion a year to suppliers by 2027 – equating to an annual saving of more than £97.50 per household – if electricity prices remain at their current high levels.

The amount, which only covers intermittent renewable generators, assumes a reference price for electricity of just over £170/MWh. The think tank calculated this as the weighted average market price for intermittent generators so far in 2022.

The report explained that the third allocation round 3 (£3.5 billion), which took place in 2019, and the ongoing fourth allocation round (£5.5 billion) account for the bulk of the £10.5 billion total.

The report said annual returns to suppliers would still amount to almost £3 billion if the electricity price for intermittent generators dropped to £100/MWh but would be worth only £231 million if market prices fell to £75/MWh. In the case of the latter, receipts from cheaper, more recent projects would be largely offset by payments to earlier, more expensive projects.

The figures assume that 7GW of offshore wind, 2.5GW of onshore wind and 2.5GW solar are successful the fourth allocation round and that the contracts are awarded at their maximum allowed strike prices of £53/MWh, £46/MWh and £47/MWh respectively (2011/12 prices). The report said this equates an average weighted strike price of £51.41/MWh – or £61.98/MWh in real terms. However, in the third allocation round several offshore wind projects secured contracts at just £39.65/MWh (2011/12 prices).

Earlier this year, the Low Carbon Contracts Company revealed it expected to hand £39 million back to suppliers after seeing the first ever quarter in which payments from generators returned more money than they received over the last three months of 2021.

Currently CfDs pay back money to electricity suppliers, rather than directly to customers as the levy on their electricity bills cannot be set to below zero. To ensure they receive this money, Onward has called on the government to reform the scheme, either by allowing the CfD levy to be set at a negative rate or providing a direct rebate to customers.