Department of Energy and Climate Change announces eight renewable energy projects that will benefit from electricity market reforms

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The government has announced that it will financially support the construction of eight renewable energy projects worth up to £12bn.

The projects, a mixture of offshore wind farms and biomass power plants, will be supported through the government’s new Contracts for Difference (CfD) system, which guarantees the price that energy project developers will receive for the power that their projects produce.

Under the CfD, which is part of the government’s wider electricity market reforms, if the market price for electricity is lower than the guaranteed price – known as the strike price – the government tops it up, but if the market price is higher than the strike price the government claws back some of the money. The intention is to make these projects more attractive to private investors and developers by providing certainty of returns.

It is the same system that the government plans to use as part of a package of support for new nuclear power plants.

The successful projects that will be offered a CfD include the 1,200MW Hornsea offshore wind farm near Yorkshire; the 660MW Walney Extension offshore wind farm in the Irish Sea; and the conversion of the second unit of the Drax power plant to biomass in North Yorkshire.

The government said the eight projects, which will be privately financed, would generate 15TWh of electricity once built, accounting for 14% of the renewable electricity generation it expects to be built by 2020.

Energy secretary Ed Davey said the contracts “marked a new stage in Britain’s green energy investment boom”.

He said: “By themselves they will bring green jobs and growth across the UK, but they are a significant part of our efforts to give Britain cleaner and more secure energy.

“These are the first investments from our reforms to build the world’s first low carbon electricity market - reforms which will see competition and markets attract tens of billions of pounds of vital energy investment whilst reducing the costs of clean energy to consumers.

“Record levels of energy investment are at the forefront of the government’s infrastructure programme and are filling the massive gap we inherited.”

Renewables projects supported

ProjectDeveloperTechnologySize (MW)Location
BeatriceBeatrice Offshore Windfarm LimitedOffshore wind664Outer Moray Firth, Scotland
Burbo BankDong Energy Wind Power A/SOffshore wind258Liverpool Bay, at the entrance to the River Mersey
Drax 2nd conversion unit (unit #1Drax Power LimitedBiomass conversion645Selby, North Yorkshire
DudgeonDudgeon Offshore Wind LimitedOffshore wind402The Wash, north of Cromer, Norfolk
Hornsea 1Dong Energy Wind Power A/SOffshore wind1200North Sea, off the Yorkshire coast
LynemouthLynemouth Power LimitedBiomass conversion420Ashington, Northumberland
Teesside Renewable EnergyMGT Power LimitedDedicated biomass with combined heat and power299Middlesborough
Walney ExtensionDong Energy Wind Power A/SOffshore wind660Irish Sea, off the Walney Island coast in Cumbria


Renewables investment map by the Department of Energy and Climate Change
<small>View <a href=";msa=0&amp;msid=216096121819309523088.0004f6ac8cc3b4e4c9b55&amp;ll=53.695328,-3.026734&amp;spn=5.570734,7.591553&amp;t=m&amp;source=embed" style="color:#0000FF;text-align:left">Renewable Electricity: Investment and Jobs</a> in a larger map</small></p>