Onshore wind farms: Simon Hart on future of renewable energy
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Funds managed by Octopus Energy have earned a 15.5 percent stake in a huge offshore wind farm in the North Sea which can power the equivalent of up to 278,000 homes every year. The stake was sold to the fund by Macquarie European Infrastructure Fund 5.
The offshore wind farm has a 270 MW capacity and stretches across 35 square kilometres, near Skegness on the east coast of England. It has been operational since 2013 and can power the equivalent of nearly 278,000 homes.
The move will boost Octopus Energy’s offshore wind portfolio, and it comes after the Government pinpointed wind as having a crucial role to play in its energy strategy unveiled in April. Former Prime Minister Boris Johnson said he wanted to see the UK’s offshore wind capacity ramp up to 50 gigwatts as the UK scrambles to reach its net zero target and wean itself off gas.
But it also came as Russia’s war in Ukriane and Vladimr Putin’s war in Ukraine have exposed the UK’s vulnerability to volatile gas markets, which have seen energy bills in Britain skyrocket despite the country only getting around four percent of the fuel from Russia last year.
This has laid bare the need for Britain to build up more alternative power sources and ramp up its homegrown energy suppliers to slash its reliance on foreign gas to help swerve the impacts of skyrocketing energy costs, which get knocked onto millions of households’ bills across the country.
This windfarm will likely play a key role in providing clean energy for hundreds of thousands of homes, which will also become much cheaper once the UK figures out how to separate the cost of electricity produced by renewables from that created by burning gas. But currently, energy costs are normally set by the most expensive fuel, which is gas.
Martin Bradley, Head of Real Assets in EMEA for Macquarie Asset Management, said: “The successful delivery and operation of projects like Lincs over the past decade has made the UK a world leader in the offshore wind sector.”
This also comes after Octopus Energy took a smaller stake in the windfarm back in April. Zoisa North-Bond, CEO of Octopus Energy Generation, said at the time: “We’re extremely excited to make our first green waves in offshore wind energy – a key pillar of the UK’s renewable energy mix. The UK has tremendous offshore wind resources.
“By backing a large offshore wind farm as well as developing floating offshore wind power, we’re tapping into this vital technology to accelerate our journey to energy independence. We’re dipping our toe in the water with this investment – but this is only the beginning.
“We’ve got big ambitions and innovative ideas for offshore wind and are going to massively ramp up our activities in this area over the coming 12 months.”
And while the windfarm is currently operated by global renewable energy developer Ørsted, Octopus has plans to make wind energy much more affordable for its customers.
In fact, its “Fan Club” model already gives the opportunity to customers to pay for cheaper electricity if they live near wind turbines. This energy tariff is now available in three locations, and can offer a discount of up to 50 percent off the unit rate for customers when the wind blows, which the firm says can knock £350 off bills.
The “Fan Club” model also lets customers plan for energy-intensive tasks according to times when their local power is cheaper by using the “Fan Club dashboard”.
Currently, the scheme includes turbines at Market Weighton in East Yorkshire, and Caerphilly in South Wales, and Halifax in Yorkshire. First launched in 2021, customers in these areas get 100 percent renewable electricity whenever their local turbines – which can power 800 homes – are spinning.
And since its launch, 10,000 people have reportedly got in touch with Octopus asking for a wind turbine near their home. Recent research by Opinion Matters also shows nine in 10 people (87percent) support a wind turbine in their community if it meant cheaper energy.
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This also comes after the price of offshore wind power fell to its cheapest ever level in Britain back in July. The Government announced that the contract price for windfarms was nearly 6 percent lower than the previous auction, which means that offshore windfarm operators will sell power for as little as £37.35 per megawatt hour.
Chancellor Kwasi Kwarteng, who was Business Secretary at the time, 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.”
Prime Minister Liz Truss has also pledged to “speed up our deployment of all clean and renewable technologies including hydrogen, solar, carbon capture and storage, and wind… where we are already the world leader in offshore generation”.
However, there have been concerns over whether the energy grid will be able to benefit from all the windfarms which are being developed in the UK as not all new windfarms are currently connected.
However, National Grid floated a £54billion plan to connect the farms to the grid, which will need to be done with hundreds of miles of onshore cabling in what would be the biggest investment in the country’s electricity transmission networks since the 1960s.
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