On July 7th, 2022, Inch Cape Offshore Wind Farm, which is owned by an equal joint venture between Red Rock Power of SDIC Power and ESB, succeeded in securing the British CfD award at the fourth round of bidding in the auction. Located approximately 14 kilometers from the Angus coast, northern Scotland, Inch Cape Offshore Wind Farm has an installed capacity of 1.08 million kilowatts. With a total investment of ₤2.5 billion (approximately more than 20 billion RMB yuan ). The project is expected to start operation and export power to the grid in three phases between 2025 and 2026.
In 2014, Britain launched the CfD (contract for differences) mechanism to encourage renewable energy development. The CfDs signed between power generation companies and specialized companies are used as supplement to electricity market price agreement. With CfDs, sale price of electricity is locked and risks caused by market fluctuations are reduced. This mechanism, on one hand, provides stable and transparent price guarantee and expectation for offshore wind farms, and on the other hand, stimulates electricity market. At present, there are a total of 38 offshore wind farm sites in Britain and their combined installation capacity reaches 10 gigawatts. Along with the progress of the global decarbonization drive, Britain is expected to continue to strengthen its investment in the development of offshore wind power. In 2022, the British government officially declared that its 2030 target of offshore wind power installed capacity will be raised from the original 40 gigawatts to 50 gigawatts and the CfDs will be revised once a year from the previously once every two years. The above-mentioned decarbonization policy is expected to further stimulate the already fierce competition in the development of offshore wind power and the fierce bidding competition in this CfD auction is directly caused by the dicarbonization drive.
In 2016, SDIC Power purchased the Red Rock Power and as a result, owned 100% of the share of the Inch Cape project. With strict procedure requirements and complex development process, Britain has a complete mechanism for investment and development of offshore wind power. After three years’ development, SDIC Power succeeded in getting the approval for expanding the installed capacity of the offshore wind farm project from the previous 684 megawatts to 1080 megawatts, with single turbine capacity increased to 15 megawatts. In 2020, SDIC Power introduced ESB as its strategic partner and in 2022, joined the fourth round bidding in the CfD auction in Britain. It is learned that world renowned power companies including SSE,Total Energies,Ørsted and Scottish Power participated in the CfD auction. SDIC Power and ESB made active preparations for the auction and through the means of increasing the approved installation capacity, optimizing technology solutions and cooperating with China’s industry chains for deep involvement in the project, had greatly reduced the kwh cost of electricity and as a result, substantially increased its entire competitiveness in the auction.
The CfD award of the Inch Cape project is an important milestone for SDIC Power in developing the European clean energy market and a major achievement in implementing the SDIC Group’s international strategy and steady development of overseas business in the 14th Five-Year Plan. It is also a testament to the strength of Chinese enterprises in participating in international competition and a model in implementing the “Belt and Road” third market cooperation initiative.
Up to date, SDIC Power has become China’s first enterprise that has the capabilities of independent development-investment and acquisitions in large offshore wind farm projects abroad and is also the first Chinese company that invested in the one-million-kilowatt level offshore wind power project abroad. In the future, SDIC Power will continue to strengthen its clean energy development, implement the 5M management mode, promote value-creation in all links and make continuous efforts to make SDIC Power a trusted and comprehensive energy investment and operation company in the world.
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