DONG Energy awarded contract for giant offshore UK wind farm

DONG Energy (CPH:DENERG) has confirmed it will build the world’s largest offshore wind farm after it was awarded the contract for the 1.4GW Hornsea 2 wind power project in the UK.

The Danish renewable energy giant will deliver the project at a strike price of £57.50 per MWh, a considerable reduction from the £140 per MWh it was guaranteed by the UK government at auction two years ago.

The drop of nearly 60% in the cost of the project in just two years reflects the falling costs within the broader offshore wind industry, making it cheaper than new nuclear power in the UK.

“For some time now, offshore wind has been spoken about within the industry as being the future of power generation in a low carbon world,” commented Tom Eldridge, a partner at law firm Mayer Brown.

“These prices, coupled with advancement in storage technology, means that offshore wind has now firmly set out its stall as being the technology to lead the UK into a low carbon future at competitive prices.”

DONG is already developing the first phase of the Hornsea project and will soon move on to phase two, which will be located around 89km off the coast of Yorkshire.

When the farm becomes operational in 2022, it is expected to provide enough energy to power 1.3 million UK homes.

“Hornsea Project 2 will contribute significantly to DONG Energy’s ambition of reaching a total offshore wind capacity of 11-12GW by 2025,” said DONG in a statement.