Hogan Lovell OffshoreBook 2023 230809 OnlinePDF - Flipbook - Page 291
Offshore Wind Worldwide 2023
4. OFFTAKE / PPA
4.1 Offtake, remuneration,
and tariff scheme
The UK electricity market is liberalised and
there are many different market participants. Pricing support has varied over the
course of the UK’s development of offshore
wind. Background to the CfD, Investment
Contract and ROC support mechanism in
the UK is set out in section 2.3 above.
Under the CfD and Investment Contract
structure:
291
Under the ROC structure:
• offshore wind generators sell their
power under a long term power purchase agreement; and
• the generators will sell the ROCs they
receive for the generation of accredited
renewable power to suppliers or ROC
traders.
4.2 Consequences of a project delay
See section 2.4 above for an overview of
the consequences of delay under the CfD
regime.
• offshore wind generators sell their
power under a long term power purchase agreement;
• the generators are treated as having
capture a defined market reference for
that power under their CfD/Investment
Contract;
• the generator will receive a ‘top up’
payment under their CfD/Investment
Contract if the market reference price
captured is less than the strike price at
which the CfD/Investment Contract
was awarded; and
4.3 CfD and Investment Contract pricing
The level of support offered to offshore
wind contracts under the Investment
Contracts and CfDs awarded to date is as
follows:
• bilaterally negotiated Investment Contracts (April 2014): £140 – 155 / MWh
(2012 prices)
• CfD auction 1 (February 2015): £114.39
- £119.89 / MWh (2012 prices)
• CfD auction 2 (September 2017):
£57.50 - £74.75 / MWh (2012 prices)
• the generator will be required to make
a payment to LCCC under their CfD/
Investment Contract if the market reference price captured is greater than the
strike price at which the CfD/Investment Contract was awarded.
• CfD auction 3 (September 2019):
£39.65 - £41.61 / MWh (2012 prices)
