SSE Regulatory News (SSE)

UK CfD Allocation Round 5

SSE plc

UK Contracts for Difference Allocation Round 5

8 September 2023

SSE Renewables has today, 8 September 2023, been informed that Aberarder Wind Farm, Bhlaraidh Wind Farm Extension, Strathy South Wind Farm, and Viking Energy Wind Farm have been successful in the UK's fifth Contracts for Difference (CfD) Allocation Round and are set to be awarded low-carbon power contracts for a total of 605MW. 

The successful projects will receive the guaranteed strike price of £52.29/MWh, based on 2012 prices but annually indexed since then for CPI inflation, for the contracted low carbon electricity they will generate for a 15-year period from the 2027/28 delivery year.

The projects' success in securing contracts follows the UK Government's Allocation Round 5 process in which the projects competed in 'Pot 1' alongside various technologies including offshore wind, hydro, energy from waste with CHP, and solar photovoltaic (PV).

Aberarder Wind Farm project, which SSE Renewables acquired in October 2022, has secured a CfD for 49.99MW (100% of total capacity). The project, adjacent to the operational Dunmaglass wind farm (SSE share 51.1%) in Strathnairn near Inverness, was granted planning consent in April 2017.

Bhlaraidh Extension Wind Farm project, which was granted planning consent in August 2022, has secured a CfD for 100.8MW (100% of total capacity).

Strathy South Wind Farm project, granted planning consent by the Scottish Government in November 2021, has secured a CfD for 231MW (100% of total capacity).

Aberarder, Bhlaraidh Extension and Strathy South will all be targeting final investment decisions in 2024.

Finally, the 443MW Viking project, located in the Shetland Islands, has secured a CfD for 223.6MW (50% of total capacity). This award follows success in Allocation Round 4 where Viking secured a CfD for 220MW (50% of its total capacity) at a strike price of £46.39/MWh (based on 2012 prices) for the 2026/27 delivery year. Construction work on the project is progressing well with all turbines now installed and, with commissioning works set to continue over the next year, remains on track for completion in late-summer 2024.

Once completed, these projects will make an important contribution to the delivery of SSE plc's Net Zero Acceleration Programme Plus, a fully funded five-year investment plan to 2027 which will see the Group invest £18bn or almost £10m a day on critical national infrastructure. This plan includes increasing SSE Renewables' net capacity from 4GW currently to more than 9GW, with around 3GW currently under construction.

Stephen Wheeler, Managing Director for SSE Renewables, said:

"We are pleased to have secured onshore wind contracts for Aberarder, Bhlaraidh Extension, Strathy South, and Viking. Onshore wind, like offshore, is a critical component of the net zero transition with an essential role to play in decarbonising the UK's energy supply.

"The CfD scheme has been a hugely successful mechanism for deploying renewable energy, but going forward, changes to the framework for offshore wind are required to ensure the UK can enhance its energy security whilst keeping costs low. Even at higher strike prices than AR5, wind power will still be far cheaper than other technologies while also delivering highly skilled green jobs and associated inward investment.

"The good news is that we now have a window of opportunity to ensure that the next auction round can bring forward the significant volumes of both onshore and offshore wind we need to achieve our energy security targets, unlock billions of pounds of investment, and enable the UK to retain its global leadership position in renewables. We stand ready to make these investments and look forward to working constructively with the Government to build on our past successes."

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