"The highly competitive prices achieved during this Auction, highlight the fact that the industry has been working hard to bring costs down, both onshore and offshore. The prices achieved by the onshore industry show what utter folly it would be to choke off this low cost form of low carbon power and the results also demonstrate that the offshore industry, provided the conditions are maintained, is well on the path to achieving its stated aim of £100/MWh by 2020.
However, there remains a lot of work to be done to ensure that developers remain committed to the UK market, bringing forward much needed power, and economic benefits."
The UK Department for Energy and Climate Change has published results of the first round of CfD allocations. Under the scheme low-carbon projects are receive a subsidy equal to the difference the pre-determined strike price and a reference price that representative of the market value of electricity. There is nothing to say that the generators will get the reference price for the electricity that they produce, so CfDs don't offer a 'guaranteed' price for low-carbon electricity. Two large offshore wind farms with a combined capacity of 1162MW have been allocated a strike price of just less than £120/MWh, and 748.55MW of onshore wind capacity has been allocated CfD for between £79.23/MWh and £82.50/MWh. The strike prices allocated are guaranteed for 15 years of operation.
In a press release this morning, RenewableUK Chief Executive Maria McCaffery highlighted the competitive prices but stressed that there is still much work to be done:
Only 5 solar projects were successful in this round of CfD auctioning, totalling less than 72MW. Under the scheme onshore wind and solar must compete for the same pot of money allocated for 'established' technologies. The news that onshore wind and solar will receive a lower strike price than nuclear, which was allocated a strike price of £92.50/MWh in 2013 for EDF's new power station, dropping to £89.50/MWh if a second nuclear plant is also built.