| Update
Green Volt, a 400 MW floating wind project being developed by Flotation Energy and Vårgrønn, won a contract for difference in the latest UK government allocation round (AR6). The picture shows part of Flotation’s existing Kincardine floating wind array. The Kincardine array’s first turbine started generating in 2018 and the project was completed by late summer 2022. The 50 MW array consists of five Vestas 9.5 MW turbines – the most powerful ever floated – and one Vestas 2 MW turbine. The Kincardine project uses steel semi-submersible floating foundations designed by Principle Power (photo: Flotation Energy)
to build new infrastructure and long-term strategic planning. It will also have strategic and medium term planning responsibility for the gas network and, uniquely, for optimising these energy networks as a ‘whole system.’ In a consultation on its roles DESNZ and Ofgem said, “the introduction of NESO is of fundamental importance to government’s wider energy system policy objectives” and “there are substantial benefits from facilitating this at the earliest and most appropriate opportunity.” In the next five years network companies will be expected to make ten times the investment in new network that they made in the corresponding period in the last decade – and install the new transmission lines faster. NESO will be the face of this ‘Great Grid Upgrade’ aimed at rolling out the necessary transmission and distribution networks, but regulator Ofgem has also responded to it.
Instead of caution about being ‘ahead of need’, the regulator has decided the key should be delivery. So, for example, instead of rewarding or penalising network companies on managing cost alone, it will
incentivise companies to deliver on time, or even ahead of time. Ofgem will also soften its opposition to network owners working together. That is because network companies’ supply chain partners and equipment suppliers are already working at full stretch – and not just in the UK. Other countries are investing just as much in network expansion and the UK has to look like an attractive customer. So the regulator will now allow networks to jointly invest in the supply chain, for example to train specialist workers, and networks may also be able to work together on long term contracts for the components needed without attracting concerns over anti-competitive behaviour.
What will the outcome be? It is too early to say whether this wholesale change will be able to deliver the green transition quickly, but the industry had good news in September with a successful ‘allocation round’ of contracts for difference for renewable energy projects. The annual auction secured 9.6 GW of new renewable energy capacity, enabling
commentators to refer to last year’s allocation round, which brought forward no new offshore wind projects, as an aberration and laud a return to investor confidence.
The 131 successful projects include nine offshore wind farms, totalling 4.9 GW, Green Volt, a 400 MW floating wind offshore scheme, as well as six tidal stream projects totalling 28 MW. Onshore, successful bidders included 22 wind projects (totalling 990 MW) and 93 ground based PV installations (some 3.3 GW in total). For two of the offshore wind farms, Hornsea 4 and East Anglia 2, the strike price (2012 prices) was 58.87 GBP/MWh, and 54.23 GBP/MWh for the other seven. The strike price for PV was 50.07 GBP/MWh, for onshore wind 50.9 GBP/ MWh, for Green Volt floating wind 139 GBP/ MWh, and for tidal stream 172 GBP/MWh. Despite its success, the allocation round still leaves the UK short of the renewable energy it needs to meet its goals. Next year’s allocation round may show whether the new-look UK energy industry has successfully set it on the path to both its ‘green powerhouse’ role and its Net Zero target.
www.modernpowersystems.com | September 2024 | 15
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