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Energy / Door open for Viking Energy to enter next renewable subsidy auction

An impression of how part of the Viking Energy windfarm could look.

THE VIKING Energy wind farm will have the option to enter the next round of the UK Government’s scheme to financially support new low-carbon electricity generation.

The 443MW wind farm, which is currently being constructed in the central mainland of Shetland, missed out on subsidy in the competitive 2019 Contracts for Difference (CfD) round when many offshore wind farm projects were successful in securing government support.

But despite what was seen by many industry observers as a setback to the project, SSE decided last year to press ahead with investing around £580 million in the wind farm.

A recent annual report released by SSE now confirms that the Viking development has the option to enter the next CfD auction, which opens for applications in December.

A spokesperson said this week the company would not expand on this any further.

The CfD scheme looks to incentivises investment in renewable energy and reduce the cost of capital while minimising the cost to customers.

Developers of new renewable projects which are successful in an auction will enter into a private law contract – the CfD – with the Low Carbon Contracts Company.

Once developers have constructed their project and start to generate electricity, they are paid a flat (indexed) rate for the electricity they produce over a 15-year period.

This is the difference between the ‘strike price’ (which is determined by the competitive auction) and the ‘reference price’ – a measure of the average market price for electricity in the GB market – for each unit of green electricity generated.

The next round of subsidies – the fourth to date – aims to double the capacity of renewable energy compared to the last round and expand the number of technologies supported, with onshore and offshore wind, solar, tidal, and floating offshore wind projects all eligible to bid.

Also planning to bid will be Peel Energy, which has consent for two wind farms in Shetland – one in Yell and another on the outskirts of Lerwick.

Construction of the controversial 103-turbine Viking Energy project, meanwhile, is expected to be completed in 2024.

SSE said it will be among the highest yielding onshore wind farms in Europe.