UK's 'first subsidy-free' project reaches financial close

UK: Financial close has been reached for what it is believed to be the UK's first wind farm to be built without subsidy.

The Withernwick II extension will consist of four of Senvion's 2.05MW MM92 turbines

The Withernwick II extension project in Yorkshire in the north-east of England will be funded entirely by revenue from a long-term power purchase agreement (PPA).

Developer Energiekontor described the unnamed buyer as "one of the UK’s leading consumer goods brands".

Senvion will supply four of its MM92 turbines for a total capacity of 8.2MW, adding to the original nine-turbine 18.45MW Withernwick wind farm, which was commissioned in 2016.

German lender Norddeutsche Landesbank structured project finance for the extension site, while legal firm DLA Piper served as legal advisor, Energieknotor stated.

Announcing financial close of the project as well as the turbine purchase agreement (TPA), Senvion and Energiekontor, which also develops solar PV projects, added they believed Withernwick II is the UK’s first wind farm to be realised without government subsidies.

"The financial close of the Withernwick II project, the UK’s first profitable wind farm under pure market conditions, shows that our strategy to reduce costs by improving efficiency is bearing fruit," Peter Szabo, CEO of Energiekontor, said.

David Hardy, Senvion’s CSO, added: "Part of the success of the Withernwick project and others like it is the ability to drive greater efficiency into the project."

UK subsidies

Wind farms in the UK have previously received government subsidies through Contract for Difference (CfD) auctions, the now-closed renewables obligation certificate (ROC) scheme and feed-in tariffs for small-scale generation.

However, onshore wind projects were excluded from the second CfD auction in 2017 and it remains unclear whether they will be allowed to bid in future auction rounds. 

The UK government’s levy control framework – which has managed spending on these support methods – is also due to be scrapped and replaced by a new, as-yet, unspecified set of controls.

And in November, the UK’s treasury department announced it would not set a new budget for renewable energy sources until their effect on consumer bills is reduced, and predicted this would mean "no new low-carbon electricity levies until 2025".