Ørsted helped by rumors of UK willingness for higher subsidies for offshore wind — EnergyWatch

Ørsted rose 5.3% to DKK 280.10 on Thursday on rumors that the UK government is preparing to offer significantly higher subsidies for new offshore wind farms to get the country’s clean energy strategy back on track after developers rejected an earlier auction.

The cap on bids from offshore wind companies in the next round of auctions is likely to be significantly more than this year’s guaranteed revenue of 44 pounds per megawatt-hour of power generated, sources familiar with the matter estimate, according to Bloomberg News.

The price, to be announced later this month, is likely to be set at around 70-75 pounds per megawatt-hour, the sources said.

An increase to that level could help attract developers after the last auction round went without bids as the price was not high enough to create profitable projects for wind farm developers.

An auction limit of 75 pounds per megawatt-hour would mark a turnaround from previous tenders, according to Bloomberg News, where prices have fallen steadily in recent years, with some deals hitting a record low of 37 pounds in 2022.

Prices are based on 2012 levels, meaning the resulting contracts could be more expensive.

”I don’t see why for 75 pounds you shouldn’t be able to build offshore wind,” Henrik Andersen, CEO of Vestas, said in an interview on Thursday, according to Bloomberg News.

”Right now you see that in the UK there is an inflationary development and that still triggers some price development upwards.”

The UK’s Contracts for Difference program ensures that wind farm developers receive a fixed price for every megawatt-hour of power their turbines produce. Usually, it’s on 15-year contracts that secure the revenue and funded by bills to consumers.

Ørsted plans to decide by December whether to continue developing projects in the UK, according to Bloomberg News.