Danish pure play renewables firm Dong Energy has been awarded a contract to build its Hornsea Project Two offshore wind farm, at the lowest-ever price for offshore wind in the UK.
At GBP 57,50MWh, the strike price for the Contract for Difference (CfD) is 50% lower than the previous round of CfD allocations just two years ago, demonstrating the rapid reduction in cost across the industry.
With a capacity of 1,386MW, enough to power over 1.3 million UK homes, Hornsea Project Two will become the world’s biggest wind farm.
It even surpasses the 1,200MW giant Hornsea Project One which DONG is currently constructing in the region.
Hornsea Project Two will be built 89 kilometres from the Yorkshire coast and is expected to be operational from 2022.
Samuel Leupold, executive vice president and chief executive officer of Wind Power at DONG Energy, said: “We’re delighted to be awarded a Contract for Difference for Hornsea Project Two, which is another important step towards fulfilling our vision of making offshore wind the most competitive form of electricity generation.”
“We have always promoted size as a key driver for cost. The ideal size of an offshore wind farm is 800-1,500MW, and therefore it is natural that Hornsea Project Two will deliver record-low costs to society.
“At the same time, the low strike price demonstrates the cost saving potential of developer-built offshore grid connections, which in the UK is included in the project scope.
“We remain fully committed to financial discipline, and Hornsea Project Two will be value creating to our investors.”
Matthew Wright, managing director, added: “This is a breakthrough moment for offshore wind in the UK and a massive step forward for the industry. Not only will Hornsea Project Two provide low cost, clean energy to the UK, it will also deliver high quality jobs and another huge boost to the UK supply chain.”
“Successive governments deserve great credit for providing the certainty for continued investment in offshore wind, enabling it to become the thriving renewable industry it is today. Costs are falling rapidly, long-term and highly-skilled jobs are being created across the North of England and the UK supply chain is going from strength to strength. We’re now really seeing the benefits of this commitment to offshore wind and there is still so much more to come. Indeed, it has the potential to play a key part in the realisation of the UK’s industrial strategy.”
Facts about Hornsea Project Two Offshore Wind Farm
• Located 89km off the Yorkshire coast.
• Total capacity up to 1,386MW, producing enough electricity to power 1.3 million UK homes.
• Expected to be operational in 2022 and will have a life time of 25 years.
• Will support up to 2,000 jobs during its construction phase with up to a further 130 permanent jobs for the operational phase of 25 years.
• To be operated from DONG Energy’s new operations hub in Grimsby which will be the largest facility of its kind in the UK when built.
• The Contract for Difference is a 15-year contract which will be indexed for inflation. After 15 years, Hornsea Project Two will receive the market price for electricity.
• Unlike recent offshore wind projects awarded in Germany, Denmark and the Netherlands, the Hornsea Project Two scope will also include the construction of offshore and onshore substations and the transmission cable connecting the turbines to the onshore substation, such assets to be sold to an offshore transmission licensee following construction.