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The government secured a record 8.4 gigawatts (GW) of offshore wind power in a flagship auction for its green energy plan.
The latest round of contracts includes six new projects located off the coast in different parts of the country.
Last year the number of projects reached a record nine, while this year power purchases hit a record high.
These projects include Berwick Bank North Sea – first new Scot The project will start in 2022 and is also the largest offshore wind power project planned in the world.
The other two are on Dogger Bank South, closer to the coast yorkshireand Norfolk Pioneer, off the coast of East Anglia – two of the largest offshore wind farms in the world.
Awel Y Mor irish sea It is the first Welsh project to win the contract in more than a decade.
The auction round also supports UK efforts to develop floating offshore wind technology, which installs turbines on floating platforms rather than fixed foundations.
The new contracts include two such projects: Erebus, off the Pembrokeshire coast in the Celtic Sea, and Pentland, off the coast of Dounreay, Scotland, which are backed by investments from UK Energy and the National Wealth Fund.
The Department for Energy Security and Net Zero said the new projects would generate enough electricity to power 12 million homes, bring about £22 billion of private investment, support 7,000 jobs and help the UK tackle the climate crisis.
According to one key industry metric, offshore wind power is 40% cheaper than the cost of building and operating a new gas-fired power plant.
secretary of energy Ed Miliband said: “With these results, the UK is taking back control of our energy sovereignty.
“This is a historic victory for those who want Britain to be self-reliant and control its own energy rather than rely on markets controlled by petrostates and dictators.”
Experts say he will need to commission 8.4GW of new offshore wind capacity during the auction to successfully meet the government’s target of eliminating almost all fossil fuels from Britain’s electricity supply by 2030.
Matching the figure on Wednesday, Miliband said the auction marked a “milestone step” towards Labour’s wider goals.
Because renewable energy projects can be costly, developers bid to obtain guaranteed rates (or strike prices) that they can charge for every megawatt hour (MWh) they generate over the next few years.
If electricity prices on the open market fall below that price, the subsidy will increase payments to the company. If the price is higher, the business must repay the difference.
The government has set an average execution price of £91 per megawatt-hour, which is just above £65 as a common benchmark price in 2012.
By comparison, Wednesday’s levelized cost of energy (LCOE) industry indicator showed it would cost £147 per megawatt hour to build and operate a new gas-fired power plant.
Mr Miliband wrote on
He said: “Clean, home-grown electricity is the right choice to permanently lower electricity bills and this auction will create thousands of jobs across the UK.”
Offshore wind has boomed since the auctions began in 2015, with development project prices falling and production soaring.
In the 2015 auction, 1GW of offshore wind power contracts were awarded. By the fourth round in 2022, this number has reached 7GW.
During this period, execution prices fell by nearly 70% due to market confidence generated by government help and economies of scale.
In the fifth round of 2023, no new offshore wind power development contract was reached due to the low execution price and no company submitted a bid.
This is a setback for the previous government, which had pledged to have 50GW of offshore wind by 2050.
Previous auctions have announced fixed capacity for a variety of renewable energy technologies – including offshore and onshore wind, solar and tidal power – but this year the process was split, with results for offshore wind only announced on Wednesday.
The government secured a record 11GW of winning bids across various technologies in the 2022 auction, up from 9.6GW last year.