Change in UK onshore wind power subsidy to boost offshore sector

The government in June announced details of a scheme aimed at making renewable energy more attractive and less risky for investors by guaranteeing a minimum electricity “strike price” for wind, solar and other green energy.

A government statement is expected to give further details, including a lower strike price for solar and onshore wind than was originally announced and a higher strike price for offshore wind.

“The strike prices we’re setting out today will unlock a big wave of investment, particularly in offshore renewables where we think that with the very positive plans we’re setting out today we can get about 10 gigawatts or more of capacity in offshore wind between now and 2020,” Alexander said.

“We’ve looked in detail at how much it costs to do offshore wind farms and onshore wind farms and big solar schemes,” he said.

“We’re reducing slightly the subsidy that we provide to onshore wind and to these big solar schemes because we think that’s the best way to get value for money.”

Germany‘s RWE in November scrapped plans to build the world’s largest offshore wind farm in British waters only a month after warning that political wrangling over green energy was endangering billions of pounds of investment.

A spokesman for the Department for Energy and Climate Change declined to confirm details but said the government would be issuing a statement.

The scheme announced in June is part of an electricity market reform to help spur 110 billion pounds ($181 billion) of investment in low-carbon energy.

The investment is needed to replace ageing nuclear and polluting coal-fired power plants, up to a fifth of which face retirement this decade. The government aims to treble the support for low-carbon technologies to 7.6 billion pounds a year by 2020.

To help give more certainty to investors, it proposes to guarantee to pay the difference between the variable wholesale power price and an agreed, fixed strike price, under a contract for difference (CfD) scheme.

This effectively sets a minimum price for power generated by nuclear, carbon capture and storage (CCS) and renewable energy sources.

In June, the price for offshore wind was set at 155 pounds per megawatt hour in 2014-2015, falling to 135 pounds/MWh by 2018-2019. The aim is to bring forward 8 to 16 gigawatts of offshore wind capacity, the government said at the time.

The price for onshore wind was set at 100 pounds/MWh for 2014-2015, falling to 95 pounds in 2018-2019, while for large-scale solar it was set at 125 pounds/MWh in 2014-2015 and 110/MWh by 2018-2019.