Wind Power

07 May 2021

UK Offshore Six Pass First CfD Milestone

07 May 2021  by   

The Low Carbon Contracts Company (LCCC) has revealed that six projects representing 5500MW of offshore wind capacity have now passed their first Contracts for Difference milestone.

The projects, detailed below, were awarded CfDs in the third Allocation Round of the scheme (AR3), as announced in 2019.

The projects that have passed their Milestone Requirement (MR) are Dogger Bank A (1.2GW), Dogger Bank B (1.2GW), Dogger Bank C (1.2GW), Sofia (1.4GW), Seagreen (454MW) and Forthwind (12MW).

The MR is the first significant milestone in a CfD project’s journey to becoming operational, as it requires generators to demonstrate their commitment to delivering the project by incurring actual spend equal to 10% of the expected development and construction costs; or by evidencing project commitments.

The later includes showing that financing is in place for the project and contracts are entered into for the manufacture and installation of material equipment for the generation and export of electricity.

The projects are due to come online in the mid-2020s.

As well as providing guidance and support on the normal contractual demands of the MR, LCCC said it helped AR3 project teams to navigate uncertainties, including COVID-19 and a Judicial Review by applying contractual Force Majeure provisions where appropriate.

The flexibility afforded by the CfD contract allowed LCCC to grant all the AR3 projects a six-month extension to their Milestone Delivery Date (MDD) in respect of the JR.

LCCC granted extensions to the MDD for the four remote island wind projects facing grid connection delays. Two projects, Bulwell and Small Heath, were unable to achieve the MR by the MDD and their CfD contracts have consequently been terminated.

LCCC CEO Neil McDermott said: “Allocation Round 3 projects faced challenges on an unprecedented scale due to the impacts of a Judicial Review, uncertainty around EU Exit, and the global pandemic. I’m incredibly proud to see these projects pass this important milestone and I commend the determination and teamwork that went into achieving it.”

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