In the latest tender round for offshore wind, Allocation Round 7 (AR7), the UK has secured a total of 8.4 GW of new capacity. This is the largest single allocation of offshore wind in both British and European history and a significant breakthrough after previous failed tenders.
The tender has been carried out via the Contracts for Difference (CfD) support scheme, where producers are guaranteed a fixed settlement price for electricity over a longer period of time. The tender has achieved fixed settlement prices for fixed offshore wind of 91.20 pounds per MWh in England and Wales and 89.49 pounds per MWh in Scotland, which gives a weighted average of 90.91 pounds per MWh. For floating offshore wind, the price has been set at 216.46 pounds per MWh. This is stated by the Department for Energy Security and Net Zero in a press release.
According to the British authorities, the result shows that offshore wind continues to be cheaper to establish and operate than new gas-fired power plants. New calculations show that fixed offshore wind in the tender is on average around 40 percent cheaper than the costs of building and operating a new gas-based power plant.
- With these results, the UK takes back control of its energy supply. It is a historic step towards clean electricity in 2030, and the price in this tender is 40 percent lower than the alternative with new gas plants, says Ed Miliband, who is the UK Energy Secretary.
The record was made possible after the government chose to increase the budget for support for fixed offshore wind. The original budget of 900 million pounds (approx. 7.7 billion DKK) was raised to 1.79 billion pounds (approx. 15.3 billion DKK) after a review of the bids received to secure additional capacity, which according to the authorities is still considered to provide good value for households.
RWE is the clear biggest winner
The clear biggest winner in the tender is the German energy company RWE, which has secured Contracts for Difference for a total of 6.9 GW – corresponding to the vast majority of the total capacity. RWE has been awarded contracts for Dogger Bank South and Norfolk Vanguard off the English east coast as well as Awel y Môr in the Irish Sea. All projects have achieved a fixed settlement price of 91.20 pounds per MWh in 2024 prices.
- We are pleased to have been successful in securing long-term off-take contracts for five projects in this tender. At the same time, we look forward to entering into a strategic partnership with KKR on the Norfolk Vanguard East and Norfolk Vanguard West offshore wind projects. By combining KKR's investment expertise in large and complex infrastructure projects with RWE's extensive experience in offshore wind, we are in a strong position to realize these projects. With the Dogger Bank South projects and our partner Masdar, we are already experiencing the value of strong partnerships, and at Awel y Môr we are working with Stadtwerke München and Siemens, who are contributing their expertise, says Markus Krebber, CEO of RWE AG, in a statement.
In addition to RWE, the British energy company SSE has also been awarded contracts in the tender. SSE has secured 1.4 GW of the Berwick Bank project in the North Sea at a price of £89.49 per MWh. In addition, two floating offshore wind projects have received support. These are Blue Gem Wind’s 100 MW Erebus project in the Celtic Sea and CIP’s 92.5 MW Pentland project off northern Scotland. Both projects have been awarded Contracts for Difference at a price of £216.49 per MWh.
Overall, the tender is expected to trigger private investment of around £22 billion (approx. DKK 190 billion) and support around 7,000 jobs across the UK, while the expansion is intended to reduce the country’s dependence on fossil fuels and fluctuations in global energy markets.
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