AR8: A defining milestone for floating offshore wind

This article was first published in The Herald.

For much of the past decade, floating offshore wind has been spoken about as a technology of the future. In more recent years, the technology has demonstrated its potential through demonstrator projects in Scottish waters. With the results of Contract for Difference Allocation Round 8 expected before Q2 2027 (in which there was a dedicated floating offshore wind pot), and with successful floating offshore wind bidders in both Auction Rounds 6 and 7, the question now is whether developers can overcome the challenges required to move beyond innovation and focus on delivery.

Allocation Round 6 and 7

Allocation Round 6 saw floating offshore wind pass a significant milestone when Floatation Energy and Vårgrønn’s Green Volt project secured a Contract for Difference (CfD) for 400MW. This was seen as a breakthrough moment for the sector, demonstrating that floating projects could successfully compete in the CfD process and providing optimism that, from a commercialisation perspective, there was a clear path forward for large-scale floating projects. Allocation Round 7 built on this progress, recognising floating has a different cost profile than fixed bottom – offering it a dedicated auction pot for the first time. The Erebus (Blue Gem Wind) and Pentland (CIP) projects successfully secured 100MW and 92.5MW CfD contracts respectively. While the awarded capacity was modest compared to the successful AR7 fixed bottom awards, it represented continued momentum for the technology and gave a signal to investors, supply-chain and ports: floating offshore wind is on track and has continued Government support.

Challenges facing delivery

The progress evidenced in the CfD rounds is emphasised by continued ambition for floating offshore wind. In Scotland, ScotWind and INTOG have created a significant pipeline of floating offshore wind, and the Scottish Government has increased its offshore wind targets to 40GW by 2040. Such ambitious objectives will not be achieved without floating projects.

While the signals from the Allocation Rounds remain positive, the floating industry continues to face significant hurdles to delivery. The technology, globally, remains at an early stage compared with fixed bottom wind, with no consensus or standardisation on the core technologies (there are currently over 100 platform design concepts). Project costs remain higher, supply chains less mature, and ports/manufacturing capability still require significant investment to be ready to deliver large-scale floating projects. And there needs to be continued growth in the industry to convince the OEMs, who currently seem to prefer the certainty provided by fixed bottom projects.

This is where Allocation Round 8 becomes key. It can give investors confidence that the projects can progress, and provide ports and supply chains with further certainty that there will be a sustained pipeline of work into the future.

Allocation Round 8

AR8 continued on from AR7 by offering a dedicated floating offshore wind pot separate from fixed bottom sites. It is anticipated that a number of floating projects will have submitted bids and there will be a hope that the successful bids can show evidence to the wider industry of a move from demonstration scale sites towards larger commercial projects.

Conclusion

AR8 appears to have come at a pivotal moment for the UK floating sector. Many ScotWind and INTOG floating projects are moving through their consent and development processes. Ports and supply chain companies are progressing towards investment decisions based on that anticipated future demand coming to fruition.

Developers, investors and suppliers will be looking for further progress from AR6 & AR7, evidence that a there is a project pipeline, that government support continues, and that commercialisation is realistic.

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