Procedures for obtaining electricity price subsidies for wind power generation

How does a wind farm subsidy work?

The CfD provides subsidy as a top up payment that the generator receives over and above a reference price (essentially the wholesale market price for electricity) to match a strike price, in essence a guaranteed price, that the wind farm owners were awarded in their contracts.

How much does offshore wind subsidy cost?

Eight of the 41 offshore wind farms took more than 50% of that total, with Hornsea taking 11% or £480 million. Statements from official sources, carelessly echoed in the press, may have given the impression that the unit subsidy cost in £/MWh, and thus the total cost to consumers of subsidy to offshore wind has been falling.

What will the UK's offshore wind subsidies mean for the UK?

The subsidies will underpin 11GW of power, which is equivalent to the total capacity of all the UK’s offshore wind operating today, if all the projects listed are built. Ørsted, Vattenfall, and Scottish Power were among the winners of the offshore wind subsidy contracts, which extend for 15 years from the time the project is delivered.

How much will a new energy subsidy cost the government?

This latest round of the subsidy programme could cost the government more than £230mn annually by 2028, according to estimates provided by the Department for Business, Energy and Industrial Strategy (measured in 2012 currency), although the number could vary significantly depending on power prices.

Will the subsidy cost per MWh for Ro supported generators fall?

The subsidy cost per MWh for RO supported generators will not fall because the support mechanism is designed such that the subsidy increases. The total subsidy burden on the consumer will only fall as the 20 year support duration ends for individual sites and they cease to be subsidised.

Will the government invest in offshore wind projects next year?

There is the potential for the government to attract a record level of private investment in offshore wind projects next year, with at least 10 projects likely to be eligible, able to power 8.5 million homes each year and reduce the UK’s need for gas by 39%. The framework they’ve set out today is a significant step forward in securing this.