Four successful bidders in Ireland's first offshore wind contract auction revealed

con747

This will be interesting to see how it progresses through planning.

https://www.thejournal.ie/offshore-wind-farms-auction-6065055-May2023/

Jonathan

€86.05/MWh is an excellent price.

con747

https://www.boards.ie/discussion/comment/120584594#Comment_120584594

From other auctions elsewhere the trend seems to be a lower price for future auctions so hopefully it will fall more in the next ones here.

the_amazing_raisin

https://www.boards.ie/discussion/comment/120584594#Comment_120584594

So my (limited) understanding is that's the minimum price guaranteed to the generators, aka the strike price

It should in theory represent the minimum amount it costs to build and run a generator including some profit margin

They could still be paid more if the wholesale price is higher, but if it goes below then the generator would be refunded by some mechanism like the PSO levy

So it doesn't necessarily mean that they'll be selling to the grid at 8.605c/kWh

However, given the large gap between the strike price and the current wholesale prices, there's a lot of room there to undercut the current wholesale rate and still turn a profit

DC999

https://www.boards.ie/discussion/comment/120584594#Comment_120584594

Is that an excellent price for the grid buying it you mean? I've no idea of the wholesale price.

Jonathan

Good thread on it here;

https://twitter.com/mu_lynch/status/1656909522621825026

DC999

https://www.boards.ie/discussion/comment/120587252#Comment_120587252

That’s a good win. I get it now. 20year wholesale rate was a good rate for consumers. And starts us moving to a model of using power when it’s available, like ‘agile’ tariffs in UK – as the producers get paid whether it’s used by grid or not. Makes sense as commercially why would they create the capacity if they have no certainly of what they could sell. So more change of new solar and wind farms here as they can see clear revenues based on wind or sun output. If we don’t offer it, those ‘farms’ will move elsewhere in Europe and worldwide. The Irish grid is also ‘competing’ to get renewable providers in a sense. 

the_amazing_raisin

I feel like calling it an auction is a bit flawed because the price bids go down not up, gives the wrong idea in people's heads

Maybe competition would be a better term?

fael

https://www.boards.ie/discussion/comment/120585455#Comment_120585455

It's my understanding this is not the case anymore. What you describe I think is ReFIT, the previous setup for wind farms. Now with RESS the wind farm will get a fixed price per MWh (even if the grid can't/doesn't take it).

(source: gov.ie - Minister Ryan welcomes hugely positive provisional results of first offshore wind auction (www.gov.ie), emphasis is mine)

The Renewable Electricity Support Scheme (RESS) is a competitive process to select projects to receive two-way contracts for difference for a guaranteed price, or strike price, for renewable energy generated over a period of up to 20 years. This effectively operates as an automatic protection against windfall gains; when wholesale prices are in excess of the strike price secured at auction, projects must return the revenue difference to electricity consumers.

I'm not sure how 'return the revenue difference to electricity consumers' would work in real life though. Does it go to the Government, to EirGrid, discount on our leccy bills?

the_amazing_raisin

https://www.boards.ie/discussion/comment/120597089#Comment_120597089

You're correct, I was thinking about the old system

So it's pretty significant that they're able to install, maintain at that price and still presumably make a profit

I assume scale is key here, installing a lot of big turbines offshore is more economical than installing a few smaller scattered around various onshore sites

Also I wonder what the arrangement is regarding the licence costs from the department of the marine to build the turbines. I'm guessing it must be a bit cheaper than leasing land onshore