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Birmingham Post
Birmingham Post
Business
David Laister

Huge Hornsea Three offshore wind project wins government renewable subsidy backing

Orsted has secured its government subsidy for Hornsea Three offshore wind farm, with a strike price of £37.35 achieved in the biggest ever renewables auction.

The 2.85 GW project will generate a further 1,200 jobs in long term operation and maintenance in Grimsby and the wider supply chain.

By 2030 the company now expects to have at least 800 people working out of the East Coast Hub on Royal Dock - around double the current numbers.

Read more: Drax agrees to keep coal on standby as government shores up winter energy options

Hornsea Three will be larger than the two world-leading wind farms Orsted already operates in the same zone combined, with the capacity increasing as turbine scale has shot up while it has been through the planning process.

Alone it will have the capacity to power 3.2 million homes.

A further 450MW has been added to the original 2.4GW scale - the equivalent of another significant wind farm seen in earlier Contracts for Difference rounds.

It just awaits a financial investment decision now from Copenhagen, with the Danish multinational likely to give it the sign-off before the end of the year, or at least within the next 18 months.

Duncan Clark, head of UK region at Orsted. (Orsted)

Duncan Clark, Orsted’s UK head, said: "This is another landmark for offshore wind in the UK. Not only will Hornsea Three provide low cost, clean energy for millions of homes in the UK, it will also deliver thousands of high quality jobs and billions of pounds of investment in the UK’s offshore wind supply chain.

“Successive governments deserve credit for providing the regulatory and policy certainty for continued investment in offshore wind – Orsted alone expects to further invest around £14 billion in the UK to the end of this decade. This has allowed the cost of offshore wind to fall rapidly and to become the thriving industry it is today, with private companies expected to invest £155 billion and almost 100,000 people to be employed in the sector by 2030.

“Now more than ever there is a need for the further development of renewable energy, not only to address the increasing threats from climate change, but also to increase the stability and resilience of energy supply. We look forward to working with government and industry colleagues to accelerate the deployment of offshore wind.”

Hornsea Four is currently going through the planning process, with plans for another 2.6GW.

Today has seen 93 projects backed, with many in solar and onshore wind - returning to the fold for the first time since 2015.

Tidal stream and floating offshore have also emerged. Offshore wind leads capacity deployment, dominated by Hornsea Three, while further down the East Coast Norfolk Boreas and East Anglia Three (both 1.3GW) were accepted, so too Scottish farms Inch Cape One (1GW) and Moray West (294MW). All will receive the same strike price.

Hornsea Project Three location map. (Orsted)

Business and Energy Secretary Kwasi Kwarteng said: “Eye-watering gas prices are hitting consumers across Europe. The more cheap, clean power we generate within our own borders, the better protected we will be from volatile gas prices that are pushing up bills.

“Thanks to today’s record renewable energy auction, we have secured almost 11GW of clean, home-grown electricity – which would provide as much power as around six gas fired power stations.

“These energy projects already have planning permission, now they have a funding contract in place. We’re going to these projects built as soon as possible to better protect millions of British families from rising costs.”

Hornsea Three's two-way contract for difference runs for up to 15 years, starting after commissioning of the wind farm, which is planned for 2027. The strike price is inflation-indexed up to and throughout the CfD period. When it ends Hornsea Three will receive the market price for electricity or enter new power purchase agreements.

Martin Neubert, deputy group chief executive and chief commercial officer at Orsted, said: “Offshore wind once again proves itself as a homegrown source of clean energy at large scale that will help the UK achieve its climate targets and increase energy independence while creating local jobs and industrial development.

“We remain fully committed to financial discipline. The strike price is inflation-indexed and the contract comes with a level of merchant flexibility. We have already secured capacity with key suppliers for around two thirds of Hornsea Three’s capex. Also, we can unlock significant synergies by taking a global portfolio view in procurement and by utilising Hornsea Three’s size and location adjacent to our existing UK East Coast wind farms with close to 4GW in operation.”

The furthest offshore of the cluster, it sits 160km off the Yorkshire coast.

Leader of North East Lincolnshire, Cllr Philip Jackson, said: "This is great news for North East Lincolnshire – particularly in terms of the jobs that would become available in the future.

"The potential investment, not only in the site, but in the supply chain that supports the industry could be phenomenal.

"I look forward to continuing to work with Orsted in the future, and seeing how we, in North East Lincolnshire, can help support the company’s aims and ambitions for this area."

Read next: Reaction from Humber Renewables Champion and RenewableUK deputy chief executive Melanie Onn

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