Dong cautions over UK’s draft CFD prices

The UK Department for Energy and Climate Change published its draft strike prices at the end of June, with subsidy support for offshore wind projects most notably falling to £135/MWh in 2018-19 from £155/MWh for contracts granted during the 2014-15 financial year.

This compared with a reduction of just £5/MWh to £95/MWh for onshore wind projects over the same period.

Dong had said it expected a decrease in the strike price for offshore wind projects over time, but now said that “the reduction was steeper than expected, and does present some challenges for future projects”.

The company currently holds equity in more than 3.4GW of potential offshore wind development in the UK, including the 1GW Hornsea and Irish Sea projects which are part of the Crown Estate’s Round 3 wind farm projects — which remain a major part of the government’s target to deliver 15pc of energy from renewable sources by 2020.

Dong had said it supported the introduction of CFDs, but would not commit to receiving subsidy support through the scheme until further details surrounding contract terms had emerged.

The draft terms and conditions for the scheme were published earlier this month, and Dong said it will carry out further assessments. The company is willing to work with the government ahead of the publication of the final delivery plan for the scheme in December, it said.

“Now that we have all the information, we are working hard to understand the impact on our potential projects and how we will deliver under the new regime. We look forward to continuing to work with the UK government over the next few months” Dong said.