Energy / Remote island wind set to benefit from latest support scheme
LARGE wind farm projects in Shetland, Orkney and the Western Isles will now have a more realistic chance of successfully bidding for government subsidies after a special provision was made for remote island wind development.
The UK Government today (Monday) published details of the next round of the Contracts for Difference (CfD) scheme as it announced a support budget for developing renewable energy projects of £265 million per annum from 2025/26.
Of that £200 million per annum is dedicated to offshore wind, while £10 million is earmarked for onshore wind.
Of the remaining £55 million (Pot 2), £24 million is ringfenced in support of floating offshore wind, leaving £31 million to be allocated to successful bids from biomass, geothermal, tidal stream, wave energy as well as remote island wind developments such as the Viking Energy, Mossy Hill, Beaw Field and Energy Isles projects in Shetland.
In September 2019 three Shetland wind farm projects, including Viking Energy, SSE Renewables’ flagship wind project, failed to secure subsidies against strong competition from large offshore wind developments.
That competition has now been eliminated as remote island wind projects has become part of Pot 2 with other ‘less-established technologies’.
The administrative strike price for remote island wind projects has been set £62 per megawatt hour. But two years ago, when the results of the previous CFD auction round were announced, successful remote island wind projects were offered a contract at a strike price as low as £39.65/MWh.
Viking Energy, when approached on Monday, said it had nothing new to add to what it last said when asked whether it would bid again for a CfD contract while construction is ongoing.
A company spokesman said: “Bidding into the next CfD auction is an option for the project and we will decide in due course whether to go ahead and do that.”
Peel L&P, the owner of the Mossy Hill and Beaw Field wind farm projects, however confirmed that they were to bid for the upcoming CfD contracts.
Director for development Rob Tate, said: “We welcome the budget announcement which is a significant step in the right direction and are looking forward to take part in the next round of Contract For Difference (CfD) early next year to help make our renewable projects on Shetland a reality.”
Frank Hay of Sustainable Shetland, the community group opposing the development, said there was no reason to separate remote island wind from offshore wind “as their characteristics are broadly similar”.
Hay said: ”The changes to the pot structure undoubtedly favour Viking Energy, should they confirm that they are going to submit a bid in the round 4 auction.
“The perception here is that BEIS [Department for Business, Energy and Industrial Strategy]/ [energy regulator] Ofgem are being helpful to one of the main sponsors of the COP26 event, SSE.
“There are also question marks about allowing participation in the auction of a project that has already committed to going ahead. It would be better to encourage new projects.”
Announcing the fourth round of the CfD process the UK Government focused on its continued support for offshore wind which, it said, would deliver 40 Gigawatt of capacity by 2030, and employ 60,000 people.
Energy minister Anne-Marie Trevelyan said the scheme’s competitive design protects consumers and thanks to the investment of successive governments the price of offshore wind has been reduced by around 65 per cent.
“These costs continue to fall as green technology advances, with solar and wind now cheaper than coal and gas in most of the world,” she said.
“Ahead of the COP26 Climate Change Summit, the Government has committed to supporting green technology and the high quality jobs it creates to help the UK build back better from the pandemic.”
The fourth allocation round will open for applications on 13 December, and is the largest yet. It aims to double the capacity of renewable energy compared to the last round.
Meanwhile, the chief executive of a company specialising in energy conservation has called for an equivalent scheme to encourage energy efficiency projects.
Troy Wrigley of Best.Energy said: “Currently more than 40 per cent of energy used by businesses is wasted, so just imagine how much easier it would be to achieve net zero emissions if we could eliminate that first.
“Raising awareness among business owners both big and small of ways they can reduce their avoidable energy waste today should be given far greater priority going forward.”
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