Ocean Winds has warned that high UK transmission charges are undermining the business case for offshore wind projects in Scottish waters, urging the government to provide greater certainty ahead of the next contracts-for-difference auction.
Speaking on the sidelines of an industry event in Glasgow, Nikki Keddie, head of external affairs and policy at Ocean Winds, said the Scottish government needed to urgently consent the company’s proposed 2GW Caledonia wind farm in the Moray Firth to allow it to prepare for Allocation Round 8 (AR8).
“The Scottish Government needs to consent our 2GW Caledonia wind farm in the Moray Firth urgently to ensure it can be best prepared for Allocation Round 8,” Keddie said.
She added that the UK government must also act quickly to restore investor confidence by clarifying future transmission charging arrangements.
“The UK Government needs to urgently provide confidence on transmission charges, both for operational assets as well as future projects looking to prepare CfD bids,” she said.
Keddie said the outcome of Allocation Round 7 for fixed-bottom offshore wind was positive overall but failed to address structural issues facing projects in northern Scotland.
“It was a good result for the UK and Scotland, but the underlying problem remains of high transmission charges disincentivising projects in northern Scotland – as seen by development being paused for the 2GW West of Orkney wind farm,” she said.
Ocean Winds is calling for changes to the CfD framework, including removing transmission network use of system (TNUoS) charges from bid costs until wider market reforms are implemented. The developer is also advocating longer delivery timelines for floating wind and the introduction of bilaterally agreed CfDs for early-stage floating projects of up to 300MW.
“One option is to remove the current grid (TNUoS) charges from bid costs until market reform is implemented,” Keddie said, adding that floating wind projects also require extended delivery years and tailored support mechanisms.
She said transmission charges were already eroding revenues from operational assets while creating uncertainty for new developments.
“Transmission charges are eroding value from operational assets that cannot respond to the escalating location signal to avoid new generation in the north of the UK, thereby eroding investor confidence,” Keddie said. Projects eligible for future CfD rounds in northern Scotland now face “huge uncertainty on TNUoS” and risk becoming uncompetitive, she added.
Asked about the UK government’s Clean Power 2030 ambition, Keddie said the target remained challenging under current conditions.
“The Clean Power 2030 target is very ambitious given the current circumstances yet provides a worthwhile target to continue urgency on delivery,” she said.
Ocean Winds expects to secure consent for Caledonia in the first half of this year and plans to prepare a CfD bid in AR8, subject to progress on transmission charging reform. The company is targeting financial close ahead of construction starting in 2028.
“We are hoping to secure full consent in the first half of this year,” Keddie said. “This will lead to us preparing a CfD bid in AR8 – assuming some change is made to TNUoS – and then financial close ahead of the start of construction in 2028.”
