Two projects in Wales are included in the latest contract for difference auction round from the UK Government
Offshore wind turbines. (Getty Images)(Image: )
The UK Government has secured a record 8.4 gigawatts (GW) of offshore wind power in its flagship auction for green energy schemes, including one which at capacity could provide clean electricity for half the homes in Wales.
The Department for Energy Security and Net Zero said the new projects would generate enough electricity to power 12 million homes, deliver around £22bn in private investment, support 7,000 jobs and help the UK tackle the climate crisis.
The latest contract for difference round (seven) – which is effectively a subsidy – comprises six new projects, including the Awel y Mor scheme from German-owned energy giant RWE off the coast of North Wales in the Irish Sea.
Awel y Mor is a first Welsh project to win a contract in more than a decade. During its construction it is forecast to create and safeguard around 2,000 jobs with a potential capacity to generate 1,100 megawatt of clean energy – enough for 900,000 homes. Construction could start next year. Around 10 kilometres from Llandudno it would consist of 50 turbines with the maximum height of its turbines at 332 metres.
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While last year hit a record number of projects at nine, this year marks a record in the capacity of power bought.
Other projects include Berwick Bank in the North Sea – the first new Scottish project since 2022, and the largest planned offshore wind project in the world.
Two others are at Dogger Bank South, off the coast of Yorkshire, and Norfolk Vanguard, off the East Anglian coast – two of the largest offshore wind farms in the world.
The auction round is also supporting UK efforts to develop floating offshore wind technologies, which see turbines mounted on floating platforms rather than fixed foundations.
The new contracts include two such projects, including the Erebus scheme from joint venture company Blue Gem Wind off the Pembrokeshire coast in the Celtic Sea.
Both the Awel y Mor and Erebus projects are expected to become operational by 2030-31 and power nearly one million homes with a combined investment of around £2.6bn.
The price for offshore wind was agreed at 40% lower than the cost of building and operating a new gas power plant, according to a key industry metric.
Jessica Hooper, director of sector body RenewableUK Cymru, said: “The auction results show what is possible when Wales competes at scale and sends a clear signal that it is open for clean energy investment.
“With electricity demand set to rise rapidly as transport, heating and industry electrify, offshore wind will be central to delivering secure, affordable, home-grown power. Wales’s success in this auction shows that we can play a leading role – but maintaining momentum will be critical if we are to anchor jobs, investment and long-term economic value here in Wales.
“The success of the Erebus floating offshore wind project is particularly important for south and West Wales. As a test and demonstration project, Erebus will be a critical first step in unlocking the huge floating offshore wind opportunity in the Celtic Sea, helping to demonstrate the technology, reduce costs and build confidence ahead of much larger projects planned for the region by 2035.”
Energy Secretary Ed Miliband said: “With these results, Britain is taking back control of our energy sovereignty. This is a historic win for those who want Britain to stand on our own two feet, controlling our own energy rather than depending on markets controlled by petrostates and dictators.”
Experts had said he would need to commission 8.4GW of new offshore wind capacity during the auction round to stay on track to meet the government’s target of removing almost all fossil fuels from the UK’s electricity supply by 2030.
Matching this figure Mr Miliband said the auction marked a “monumental step” towards Labour’s wider goal.
Because renewable projects can be expensive, developers bid to secure a guaranteed rate – or a contract for difference – they can charge for each megawatt hour (MWh) of power they generate in the coming years.
If the price of electricity on the open market dips below that, subsidies will top up payments to companies. If the price is higher, companies have to pay back the difference.
The government has secured a strike price of £91 per MWh on average or just over £65 in the commonly used benchmark of 2012 prices.
In contrast, the latest Levelised Cost of Energy (LCOE) industry metric shows the cost of building and operating a new gas-fired power station at £147 per megawatt hour.
Secretary of State for Wales Jo Stevens said: “This announcement is huge news for Pembrokeshire and North Wales. It is a massive a vote of confidence in Wales’ clean energy industry which is already delivering the well-paid, highly-skilled jobs of the future with the potential to bring thousands more.
“The UK Government is working with investors to develop home-grown clean power which will secure our energy supply and bring down bills for good. These new projects in the seas off Wales will help us achieve those goals.”
Laura Emily Dunn, senior associate at the Energy and Climate Intelligence Unit (ECIU), said: “The Welsh Government has estimated that the construction of the Awel y Mor wind farm, which has become the first Welsh energy project to win a contract for difference in over a decade, could create and support around 2000 jobs in North Wales and ultimately produce enough electricity to power half of the homes in Wales.
“We live in an increasingly unstable and unpredictable world and every wind turbine that’s built in Wales, supplying Welsh homes and businesses, is helping to shield Welsh consumers from volatility in international energy markets.”
Philippa Powell, project lead for Awel y Mor, said:“With this successful contracts for difference award, one of Wales’s largest renewable energy investments can now progress toward the next phase of development with confidence.
“Our next steps will include further onshore and offshore site investigations ahead of construction, while continuing to work closely with local communities, suppliers and stakeholders.”
Welcoming the awarding of a contract for difference, Chief executive of Simply Blue Group, a joint venture partner in the Erebus scheme, said: “This is a milestone for the project and for floating offshore wind in the Celtic Sea.”
