CFD Allocation - Seagreen Results

SSE plc

UK Contracts for Difference Allocation Round 3 - Seagreen Results

20 September 2019

SSE Renewables has today, 20 September 2019, been informed its Seagreen Phase 1 offshore wind project has been successful in the UK's third Contract for Difference (CfD) Allocation Round and is set to be awarded a contract for low carbon power.

Seagreen Phase 1, currently wholly owned by SSE Renewables, is located in the Firth of Forth off the Scottish coast. Its total planned installed capacity is 1,075MW and it is expected to generate around 5,000GWh annually.

The project has been successful in securing a 15-year contract for 454MW at a strike price of £41.61/MWh (in 2012 prices) in auction delivery year 2024/25. Outside the 15-year period, it will be an important asset with significant earnings capacity. The contracted capacity represents 42% of the total project capacity although SSE Renewables is planning to build all 1,075MW.

Seagreen Phase 1 is at an advanced stage of development and securing a CfD is a significant step in taking the project forward. Plans are in place to progress financing and an equity stake sell-down to move towards a final investment decision in 2020. SSE Renewables will set out a further project timeline in due course.

Today's result enhances SSE Renewables' position as the leading renewable energy company across the UK and Ireland. Once complete, Seagreen will add to SSE Renewables' portfolio of operational joint venture offshore wind assets - alongside Greater Gabbard, Beatrice and Walney. It fits strongly with the SSE Group's broader strategy to create value for shareholders and society from developing, owning and operating energy and related infrastructure and services in a sustainable way, with regulated energy networks and renewable energy at its core.

Jim Smith, Managing Director of SSE Renewables, said: "We are extremely pleased that Seagreen Phase 1 has been successful in securing a 15-year CfD in a highly competitive auction. The strike price of £41.61/MWh is a great outcome for UK customers and shows that offshore wind is now one of the most affordable forms of renewable power.

"It demonstrates the quality of SSE Renewables' expertise in the development of renewables and offshore wind in particular. Our experience in construction and operation will be a key strength as we move forward with Seagreen.

"SSE Renewables believes offshore wind is the foundation of a zero-carbon world, and we are delighted that Seagreen will be providing clean, renewable electricity needed to meet both the UK and Scotland's ambitions carbon reduction targets. It's estimated that Seagreen will contribute over £2 billion to the UK economy, of which £1 billion will be in Scotland, and we are committed to maximising the socio-economic benefits created by the project."

SSE Renewables acknowledges that an application has been made by a third party against the Department for Business, Energy and Industrial Strategy (BEIS) for a judicial review in relation to the CfD auction process. BEIS has publicly stated that it will defend the claim. SSE Renewables continues to monitor the situation closely.

SSE Renewables' operational and consented offshore portfolio consists of:

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