Iberdrola, through its US subsidiary Avangrid, has recently made headlines by securing a significant contract for the development of the New England Wind 1 offshore wind farm, which boasts an impressive capacity of 791 megawatts (MW). This project is set to supply energy to about 400,000 homes across Massachusetts, with commercial operations scheduled to kick off by 2029, contingent upon the execution and approval of the necessary power purchase agreements. This initiative is part of the broader movement toward enhancing energy infrastructure throughout the United States, particularly focusing on offshore wind power, which is increasingly recognized for its strategic role in diversifying national energy sources.
The New England Wind 1 project is expected to create more than 4,400 full-time equivalent jobs and inject approximately $3 billion of local investment, particularly benefitting areas like Salem and New Bedford, Massachusetts. New port and manufacturing facilities will be established as part of this investment surge, emphasizing the growing interest and strategic necessity of bolstering infrastructure to support the burgeoning offshore wind industry. Beyond economic gains, the project aligns with US energy goals aimed at reducing greenhouse gas emissions, thereby enhancing sustainability.
Interestingly, New England Wind 1 is set to share proximity with the Vineyard Wind 1 project, which is currently under construction off Martha’s Vineyard. Vineyard Wind 1 claims the title of the first large-scale offshore wind initiative within the United States, with its own capability to service around 400,000 homes. It's also projected to reduce energy costs by about $1.4 billion over two decades and cut carbon emissions by more than 1.6 million metric tons annually. Collectively, these projects highlight the tremendous economic and environmental potential embedded within renewable energy sources.
Iberdrola's ambition extends well beyond the borders of the United States. The firm is actively amplifying its offshore wind portfolio on the global stage, with 2,300 MW of offshore wind capacity installed as of mid-2024. The company has established goals to reach 4,800 MW by 2026. This overseas expansion is already taking shape with substantial investments, including recent contracts for projects like East Anglia Two and East Anglia Three in the UK, which are poised to deliver over 1,000 MW of energy.
Meanwhile, the energy dynamics within Europe are equally promising for Iberdrola. The firm is gearing up for new developments, such as those set to propel offshore wind capabilities in the Baltic waters, including projects like Wikinger, Baltic Eagle, and Windanker. These initiatives serve as testaments to continued growth within the sector. By solidifying offshore wind assets, Iberdrola is positioning itself to proactively navigate regulatory and market changes, effectively solidifying its status as one of the foremost players within the global energy sector.
Switching focus to the UK, the government has recently announced the results of its latest windfarm auction, marking significant advancements. The nation has successfully awarded Contracts for Difference (CfDs) for 6.3 GW of new wind capacity, of which 5.3 GW is derived from offshore wind projects, including 400 MW of floating wind. An additional 990 MW is sourced from onshore wind facilities. This announcement marks progress, particularly following the previous auction, which yielded no offshore wind bids. The government believes it needs even larger volumes from future auctions to remain on track for its ambitious 2030 decarbonization objectives.
The previous auction's failure to attract offshore bids was attributed to price ceiling limitations. This time, the UK raised the price ceiling by 66% to a more viable £73/MWh. The renewed budget for the auction, introduced by the new Labour Government, successfully persuaded developers to submit bids for several projects, leading to optimistically larger volumes for offshore wind.
The latest auction results comprise nine bottom-fixed offshore projects amassing 4.9 GW of new capacity, alongside one floating wind project contributing 400 MW. Despite the promising figures, industry insiders highlight the need for the UK to continually secure larger clean energy capacities through subsequent annual auctions to fulfill its carbon-cutting targets. Below is the list of the winning offshore wind projects:
- Hornsea 3 (1.1 GW) – Ørsted at £54.23/MWh
- Hornsea 4 (2.4 GW) – Ørsted at £58.87/MWh
- East Anglia 2 (963 MW) – Iberdrola / ScottishPower Renewables at £58.87/MWh
- East Anglia 3 (158.9 MW) – Iberdrola / ScottishPower Renewables at £54.23/MWh
- Inner Cape A & B (266 MW) – ESB and Red Rock Renewables at £54.23/MWh
- Moray West Offshore Wind Farm (73.5 MW) – OW Ocean Winds and Ignitis Group at £54.23/MWh
- Green Volt Offshore Wind Farm (floating) at £139.93/MWh
Onshore wind projects had their moment too, with 22 onshore wind farms awarded CfDs totaling 990 MW, having an average strike price of £59.90/MWh. Most of these initiatives are concentrated mainly within Scotland, with some located in Wales and England. The new UK Government’s lifting of the de facto ban on new onshore wind developments will gradually pave the way for future projects, including the establishment of focused task forces aimed at overcoming barriers to onshore wind initiatives.
Overall, the latest auction results herald over £14 billion of new private energy investment, setting the stage for the first projects to start generating electricity by 2026. The expansion of wind energy stands at the core of the new UK Government’s target to fully decarbonize electricity consumption by 2030, committing to doubling onshore wind and quadrupling offshore wind capacity during this period. Nevertheless, it will be imperative for the industry to accelerate project rollouts and boost auction volumes and budgets.
Giles Dickson, CEO of WindEurope, expressed optimism about the developments, commenting, “This is going in the right direction – and it is a big improvement on last year’s failed offshore wind auction. But the UK needs to secure more clean energy capacity in each annual auction to reach its current targets. Auctions like this also help to stimulate new supply chain investments and strengthen the UK’s existing supply chain.”
Meanwhile, Thistle Wind Partners (TWP) has initiated its own advancements by submitting an onshore scoping report to Aberdeenshire Council for infrastructure connected to its 1 GW Bowdun offshore wind farm project. The report outlines the proposed onshore infrastructure and its approach to the Environmental Impact Assessment (EIA), considering various baseline data sources.
Strategically located 44 kilometers east of Stonehaven, the Bowdun offshore wind farm aims for grid connection at the proposed transmission operator substation near Fetteresso Forest, with its preferred landfall near Benholm. TWP has engaged with local stakeholders through the optioneering process, addressing environmental constraints and collaborating with several landowners to determine landfall and cable routes.
Notably, onshore assessments like wintering bird and intertidal surveys have already been completed, with ecology surveys continuing to bolster environmental baseline measures. To keep the community engaged, TWP plans to hold consultation events across Aberdeenshire between October 28 and 30, 2024. This scoping report submission follows TWP's earlier actions involving the Ayre offshore wind farm.
Developing both Bowdun and Ayre wind farms commenced after TWP garnered seabed lease options from Crown Estate Scotland back in January 2022. Construction is slated to start on both projects by 2029, with the aim of having them fully commissioned by 2033.
These developments not only signify the growing momentum of offshore wind projects across the UK and the USA but also reflect the industry’s significant adaptability and response to the burgeoning demand for clean energy. The commitment from firms like Iberdrola and TWP indicates confidence in maximizing wind energy's potential and addressing energy challenges faced globally. The progress achieved through auctions and strategic project developments is set to play pivotal roles as countries strive to meet their decarbonization targets, highlighting the importance of renewable energies as they pave the path toward sustainability.
