ScottishPower Renewables Ltd. selected Siemens AG to deliver turbines for a U.K. offshore wind farm in a deal that may be worth almost half the 2 billion-pound ($3.1 billion) cost of the project.
The utility chose Siemens as its preferred supplier to deliver as many as 102 of its 7-megawatt systems to the East Anglia One wind farm off Britain’s east coast, ScottishPower said in an e-mailed statement. The deal is the largest yet for an approved facility in the country’s wind-power industry, it said, and it may be worth as much as 850 million pounds.
The project will be “the most cost-effective offshore wind farm ever delivered,” ScottishPower Renewables Chief Executive Officer Keith Anderson said in the statement. “Selecting the turbine supplier will be the single largest agreement for East Anglia One, and the most significant in terms of achieving important cost-reduction goals.”
Offshore wind is currently one of the most expensive clean-energy technologies costing about $176 a megawatt-hour compared with electricity from coal at about $91, Bloomberg estimates show. U.K. developers plan to cut this to 100 pounds, or about $153, a megawatt-hour by the turn of the decade.
ScottishPower’s facility will produce electricity at about 119 pounds a megawatt-hour and it will receive premium payments for its power through the U.K. government’s so-called contracts-for-difference auction. The project will create about 3,000 jobs and when it’s complete in 2020 it will be able to power about half a million homes.
Using the Siemens systems could aid in reducing costs through fewer turbines being required for the same sized project, Tom Harries, an analyst at Bloomberg New Energy Finance, said in an e-mailed response to questions.
More than half of the facility’s components and services will be made and sourced in the U.K. and Siemens will use its manufacturing plant in Hull to make the turbine blades.
The U.K. is Europe’s largest offshore wind market, accounting for more than half of all installed capacity at 813 megawatts, according to estimates from the European Wind Energy Association.