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Dong Energy has confirmed it will move ahead with plans to construct what will be the world’s largest offshore wind farm in 2018 after an offer of £140/MWh from the UK government.
The 660MW wind farm extension project will be developed 19 kilometers off the west coast of the UK, narrowly topping the installed capacity offered by the 630MW London Array project.
Dong Energy secured an early Contracts for Difference (CfD) deal in April this year guaranteeing the project a revenue 50 per cent higher than that for the Hinkley Point new nuclear project.
But Dong Energy executive vice president Samuel Leupold said the scale of the project will help to drive down costs for the industry in the future.
“A prerequisite for long-term growth in the industry is that offshore wind eventually can compete on costs with other energy technologies. Building Walney Extension will bring us one step closer to that target, and I’m satisfied to see that we keep bringing costs down, while continuing to expand the UK supply chain,” he said.
The Walney project, along with 8 other projects, was granted an ‘early’ CfD without the need to compete at auction, leading to criticism from the Public Accounts Committee (PAC) that the deals fail to offer value for money to the consumer.
The so-called ‘early investment’ contracts were intended to avert an investment hiatus, but the PAC said that the lack of price competition in this round means consumers may be forced to foot unnecessarily high costs.
Of the eight low carbon projects to receive an early support deal, 5 are offshore wind developments including Dong’s 258MW Burbo 2 project in the Irish Sea and Statoil and Statkraft’s 402MW Dudgeon project.
Although Walney will be the largest wind farm when it begins operations, even larger projects also secured early CfDs and will join the market shortly thereafter. SSE and Repsol’s 664MW Beatrice project off northern Scotland and Dong and SMart Wind’s giant 1200MW Hornsea 1 project are set to usurp the Walney array’s dominance when they begin to generate at the end of the decade.
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