SSE PLC and SIMEC Atlantis Energy among winners of latest UK CfD renewable energy auction

SSE PLC (LSE:SSE), Iberdrola and Engie are among the winners of the latest government auction for long-term power contracts, promising to provide offshore wind power for as little as one-eighth the price wholesale gas.

The British government is relying on a series of recently awarded cheap electricity contracts to help the country through the emerging energy crisis.

These “contracts for difference” guarantee producers a floor price for low-carbon electricity, while guaranteeing the stability of electricity prices over a contractual period of up to 15 years.

The winners of the latest auction for offshore wind power capacity are Red Rock Power (owned by China’s SDIC), ScottishPower (owned by Spain’s Iberdrola), Danish developers Vattenfall and Orsted, France’s Engie and renewable energy branch of the Portuguese Energias de Portugal.

The stock price of many project winners rose this morning. Iberdrola shares were up 0.19% at 11:46 a.m. Engie shares rose 1.71%, while Orsted shares rose 0.15%, EDP Energias de Portugal shares rose 0.45% in France and SDIC Power shares rose 0.45%. rose 1.35% in Shanghai.

They have won contracts for a series of offshore wind farms, including Inch Cape, East Anglia 3, Norfolk Boreas, Hornsea 3 and Moray West, to be built off the coasts of England, Scotland and the Country. of Wales.

The government has awarded over sixty electricity contracts to solar PV projects for delivery from 2024 to 2025, and one energy from waste project, priced at £45.99.

Given the impact of inflation, especially if gasoline prices go down in the future, they may not be much more expensive in real terms to deliver than offshore wind, an analyst told Proactive, but on a much smaller scale.

Solar projects are less scalable than offshore wind, with Hornsea 3 being the largest project to secure a ‘contract for difference’ in the final round, representing around 2.85GW of installed power capacity expected to be delivered by 2027 .

Ten onshore wind projects have won contracts to supply electricity for £42.47 for delivery from 2024 to 2025.

The most expensive power contracts awarded in the fourth round of government were for four tidal stream projects, which offer the most reliable source of continuous or ‘baseload’ power, for £178.54 per MWh, for projects scheduled for delivery from 2025 to 2027.

Among them was a tidal energy project from SIMEC Atlantis Energy Ltd (AIM:SAE, OTC:SMAYF). Simec Atlantis shares are up 42.83% this morning, trading at 1.79p per share.

Following the NIMBYism (not in my backyard) attitude among many Conservative-led voters, subsidies for onshore wind and solar power were cut in 2019, and subsequently many onshore wind farms that won contracts during the last fourth round of CfD will be located in remote islands.

This includes SSE Renewables’ Viking project on the Shetland Islands from 2026-2027. SSE shares were flat this morning.

Despite the Crown Estate announcing this week that it has demarcated five seabed strips for floating offshore wind projects and recent allocations under the fourth round of government approvals, the floating offshore wind farm of Bechtel Infrastructure and Power, the TwinHub offshore floating wind project, was the only one to obtain a guaranteed floor price through a government contract.

Potential competitors such as BP PLC (LSE: BP.), which recently won development rights to the massive 2.9GW Morven offshore wind farm off the east coast of Scotland, and Shell PLC (LSE :SHEL, NYSE:SHEL) Offshore wind farms near Caithness were surprising omissions from the round.