A £2 billion wind array off the coast of Fife has emerged as the major Scottish winner in the UK electricity market’s first green energy auction.
Mainstream Renewable Power has been awarded a 15-year Contract for Difference for its Neart Na Gaoithe (NNG) development off Fife Ness.
The contract guarantees the developer an inflation-linked price for electricity produced by the 450MW capacity scheme.
Mainstream chief operating officer Andy Kinsella said the firm was “delighted” that NNG had been awarded a contract.
“We look forward to getting the windfarm construction-ready over the coming months in partnership with Siemens and GeoSea,” Mr Kinsella said.
“What’s unique about this project is that it will be the first time a UK offshore windfarm of this scale will be built using project finance alone.
“Today’s announcement is the result of seven years of dedication and demonstrates Mainstream’s world-class expertise in project development, engineering and finance.”
Planning approvals were awarded to NNG and two neighbouring arrays Inch Cape and the twin Seagreen Alpha and Bravo developments by the Scottish Government last October but development prospects were dealt a blow last month after RSPB Scotland announced it was seeking judicial review of the consents.
Seagreen, a joint venture between utility giant SSE of Perth and Fluor Limited, did not take part in the auction.
However, Inch Cape Offshore Limited, a joint venture between Repsol and EDP renewables, was unsuccessful in its bid to secure a contract.
Ronnie Bonnar, managing director of Repsol Nuevas Energias UK Limited, said the firm would reapply in the next CfD round but warned that lack of certainty over investment return could hamper the renewable industry’s growth.
“Our focus will be to advance the project in preparation of the next allocation round, however it is essential that there is early visibility and sufficient budget allocation to encourage developers to maintain investment in this sector,” Mr Bonnar said.
“Without this there is a high risk that investment in the sector will dry up along with the opportunity to deliver green energy and thousands of UK jobs.”
Energy Minister Fergus Ewing said it was disappointing that Inch Cape and a second Scottish offshore array at Moray had missed out.
“However I welcome the news that Neart na Gaoithe and ScottishPower’s East Anglia Project has been awarded contracts to supply electricity,” Mr Ewing said.
“With Neart na Gaoithe (Mainstream) and Beatrice (SSE) we now have just over 1GW of offshore wind in Scottish waters with funding support which could generate enough electricity to power the equivalent of over 600,000 homes.”
In total, CfD contracts worth a total of £315 million went to 27 UK projects across five renewable energy sectors including solar, waste energy and wind.
In addition to NNG, 10 Scottish onshore wind projects also received contracts.
Niall Stuart of trade body Scottish Renewables said the CfD auction was a step in the right direction but said the Department of Energy and Climate Change (Decc) still had work to do.
“There remain almost 3GW of projects with planning permission which will still be looking to secure contracts in the future,” Mr Stuart said.
“Together they could create over 10,000 jobs during construction and over £2 billion in GVA.
“For them, the focus is now on the next auction, which is likely to start within the next 12 months.
“Yet we still have no indication of the size of the budget that will be available and competition for support could be even tighter.
“It is essential Decc gives some clarity on this as quickly as possible.”
Gina Hanrahan of WWF Scotland said the first CfD contracts was a “milestone” for the renewables industry.