Two Scottish renewables businesses are celebrating after being awarded lucrative fifteen-year contracts for green energy generation as part of the auction process delivered by the UK government.
A new biomass CHP plant will now progress in Grangemouth and the new wind farm on Moray East will go ahead as planned. The contract bidding process works as an auction, where the lowest bidder is selected to receive the government subsidy for clean energy generation. The projects are being progressed on a JV basis between Engie and EDP, and both will go online for power generation from 2022. The new contract was formally announced by the Department for Business, Energy and Industrial Strategy this week.
The CEO of Scottish Renewables said that the cost reductions seen in offshore wind had been substantial and had demonstrated the drive of developers to operate in an increasingly cost-efficient way, innovating to drive down costs.
The Grangemouth biomass plant will begin generating clean energy in late 2021, and managed to demonstrate a notable cost reduction as part of its tender documentation for the round of energy contracts. Together, the two projects should be in a position to generate sufficient clean energy to produce the equivalent of the total power needs of 1,136,000 homes.
The news demonstrates how the energy landscape is changing. Subsidies for new offshore wind developments have dropped by 50pc since the last round of government auctions in 2015.
Clean energy produced from Britain's offshore wind developments will now be less expensive than nuclear-generated energy for the first time on record.
The winning firms said that they would build their new developments for £57.5 per MwH. This compares to the Hinkley Point C nuclear plant, which secured government subsidies at £92.5 per MwH.