The UK’s subsidy auction for new offshore wind projects has revealed guaranteed prices that, for the first time, are lower than those for new nuclear plants. innogy Renewables and Statkraft’s Triton Knoll offshore wind farm is one of the projects to benefit, securing a subsidy of £74.75 per megawatt hours.
Triton Knoll, which could create up to 3,000 new jobs during construction, is being developed as a joint venture between innogy (50%) and Statkraft (50%), with innogy managing the project on behalf of the partnership. The project will be located approximately 32km off the Lincolnshire coast and 50km off the coast of North Norfolk. It has consent to install almost 60 kilometres of onshore underground export cable, and a new substation near Bicker Fen. It is envisaged around 90 turbines will be installed generating circa 860MW.
Wind farms have been providing decreasing costs for some time helped by improving technology, innovative methods and larger turbines.
“Falling prices for low carbon technologies show that electricity market reforms are working as intended. Early projects were more costly, but as technologies have matured, developers can achieve lower costs,” said a spokesman for EDF Energy.
At Triton Knoll, project joint owners innogy and Statkraft said today’s success was excellent news for both consumers and the renewables industry, and called for more auctions in future to help secure the accelerating trend of cost reductions in offshore wind.
The circa 860MW East coast project expects to trigger a capital expenditure investment of around £2bn into much needed UK energy infrastructure. This would enable the delivery of some of the lowest cost energy generation for consumers, as the cost of offshore wind continues to fall at an unprecedented rate and is well below nuclear and cost-competitive with new gas-fired plant.
Following today’s auction success, Triton Knoll will now progress towards a financial investment decision likely in 2018 with full onshore construction starting shortly after, and offshore construction in 2020. First energy generation could be as early as mid-2021, with the project expecting to be fully operational in 2022.
For innogy, a 50% owner of Triton Knoll, the project’s auction success is a cornerstone of the company’s growth strategy.
Peter Terium, CEO of innogy SE, said: “I am very pleased that Triton Knoll has been successful in the latest UK auction. Together with our partner Statkraft, we have passed an important milestone on the way to realising our offshore wind power project and also proved that we can be successful in a very competitive market environment. A large proportion of our planned investment in growth is intended to flow into renewable energies. Together with our grid and retail businesses, they will make innogy the innovative, decentralised and sustainable energy company of the future.”
Hans Bünting, COO Renewables of innogy SE, adds: “Today innogy is already one of the large operators of wind power plants in Europe – onshore and offshore. Triton Knoll’s auction success confirms the excellent work we have done in recent years. Thanks to our extensive know-how in the development as well as the construction and operation of complex offshore projects and our varied research and development activities we have succeeded in developing a valuable project and in further reducing the costs for offshore wind energy in the UK.”
Christian Rynning-Tønnesen, Statkraft CEO, said: “We are delighted with the successful outcome for Triton Knoll in the CfD auction, which demonstrates the combined expertise of the two partners. As Europe’s largest generator of renewable energy, Statkraft plays a substantial role in driving forward developments in the renewables industry both in the UK and other markets around the world. Our strong partnership with innogy has helped bring forward a cost competitive project that represents value for UK consumers, alongside ensuring future energy security. Investors will now be invited into the project.”
Paul Cowling, innogy Director of Offshore Wind, said Triton Knoll’s auction success reinforced the downward trend of offshore wind costs, and called for more auctions in future.
He said: “Triton Knoll will provide low cost, clean sustainable energy for consumers and UK businesses, that is cheaper than nuclear and competitive with new build gas generation. Cost reduction is at the heart of offshore wind development and is accelerating faster than ever. The importance of offshore wind in the UK’s energy mix is now beyond doubt. Wind energy should be at the very core of UK Government’s energy policy and our long term energy security.
“With these price reductions achieved, we now look forward to Government announcing the dates for future auctions, to continue to drive further cost reductions both in offshore wind and across other technologies.”
James Cotter, Triton Knoll Project Director was delighted that the project, over 10 years in the making, can now progress with real certainty towards construction start and the delivery of low cost energy generation.
James said: “Triton Knoll will be one of the most cost effective wind energy projects in UK waters, delivering an expected minimum of at least 800,000 homes equivalent(2) of sustainable, renewable energy. It will benefit local and UK businesses as we aim to deliver around 50% UK content from our investment across the project’s lifecycle, and can help nurture skills for the future.
“Throughout, we’ve worked closely with our supply chain partners prior to our bid to ensure that, not only do we have a highly competitive project, but one that is highly deliverable and ready to go for the benefit of UK consumers. We will now progress towards financial closure in 2018 and construction start shortly after, and look forward to realising opportunities for regional and UK businesses, and to working closely with them in the months to come.”
Regionally, preparations for Triton Knoll’s start of onshore work are well underway, and a full programme of onshore survey works is being completed, while some key early works are being prepared to pave the way for construction later.