Ocean Winds has secured £2 billion of non-recourse project finance and reached a Final Investment Decision (FID) on funding for its Moray West offshore wind farm in the Moray Firth.
Ocean Winds, the project’s primary sponsor, is a joint venture between EDP Renewables and ENGIE dedicated to offshore wind, with Ignitis Group as minority shareholder. EDP Renewables and ENGIE have combined their offshore wind assets and project pipeline with a total of 1.5GW under construction and 4GW under development. They are targeting 5 to 7GW of projects in operation or under construction and 5 to 10GW under advanced development by 2025.
The news was also welcomed by wind power trade body RenewableUK, which said the news will “strengthen Britain’s energy security and provide cheap power for consumers”.
The wind farm will produce up to 882MW of power and is expected to be operational by 2025.
According to Ocean Winds, Moray West is the first offshore wind farm in the UK to rely mainly on corporate power purchase agreements (CPPAs) for the commercialisation of its output. CPPAs were signed for more than 50% of the project’s output, which Ocean Winds say helped speed up the project’s progress.
RenewableUK’s executive director of policy, Ana Musat, said: “It’s great to see Moray West reaching a Final Investment Decision… This means that two of the offshore wind projects which won Contracts for Difference in last year’s auction round have reached FID.
“We hope that conditions will be right for the remaining pipeline of offshore wind projects which also secured CfDs last summer to be able to make similar announcements as soon as possible, as these three projects would save consumers at least £2 billion a year compared to the cost of using gas and would generate enough electricity to power more than five million homes a year,” Musat said.
The fifth round of CfD contract allocations opened for applications in March 2023, with a budget of £205 million. It was criticised for sending the wrong financial signals, with the previous CfD round in 2021 offering £285 million.
Musat added that for other projects to reach FID, it was essential “to continue improving the investment environment, underpinned by a stable policy and regulatory framework.”
“We need to ensure that the UK remains one of the most attractive destinations in the world for investment in offshore wind. For example, extending the recently-announced capital allowances regime to at least five years would send a strong signal that Britain is the best place to do business,” said Musat.
Musat said the industry hoped for reforms to CfD which would maximise the amount of new capacity it can deliver, and to secure “wider industrial benefits”. The government is currently considering reforms to the scheme to include other factors besides price, such as “how much a renewable energy project contributes to the wider health of the renewable energy industry.”
