As Giles’s mentioned in his recent blog , the winning offshore wind contract values in the latest UK CfD auction announced on 11 September are £74.75/€84.90 for Triton Knoll and £57.50/€65.31 for Hornsea 2 and Moray Firth. These are equivalent to LCOE of €77/MWh and €62/MWh.
Over the last week, we’ve been looking at the auction prices and how we think each of the bidders will achieve these prices.
Triton Knoll probably had a lower bid price than it received at the auction: it’s a good site and can reap the rewards of the LCOE savings that we have seen recently in Germany, Denmark and the Netherlands. It probably had its bid raised up to this auction price by one or more biomass project with this price (or by the owners of that biomass project thinking that Triton Knoll has this price and bidding accordingly).
At Hornsea 2, DONG can go big. Effectively they can build a (very) large extension of Hornsea 1. Standardisation across the whole area and a designated supply chain producing and servicing the equipment can drive down LCOE. DONG already knows the winds and waters, and it also knows the performance of the turbines. With such a large site, it is easier to hold spares in common and have all technicians know how to install and operate these particular turbines. DONG have also talked about reducing cost in the transmission link, which at over 100km is important and could have an impact between of €1.50- €3.00/MWh.
For Moray Firth, we think next generation (10MW+) turbines may well need to be used to get the low LCOE implied by their winning auction bid. This will probably require a new marine licensing application to raise the maximum allowable tip height. If EDPR can finance the project without this new technology risk impacting significantly on the weighted average cost of capital (WACC), then an LCOE of €62/MWh is achievable.
