World's biggest offshore wind farm to add £4.2 billion to energy bills

The world's biggest offshore wind farm is to be built 75 miles off the coast of Grimsby, at an estimated cost to energy bill-payers of at least £4.2 billion.

The giant Hornsea Project One wind farm will consist of 174 turbines, each 623ft tall - higher than the Gherkin building in London - and will span an area more than five times the size of Hull.

Developer Dong Energy, which is majority-owned by the Danish state, said it had taken a final decision to proceed with the 1.2 gigawatt project that would be capable of powering one million homes and create 2,000 jobs during construction.

First electricity from the project is expected to be generated in 2019 and the wind farm should be fully operational by 2020.

The wind farm was handed a subsidy contract by former energy secretary Ed Davey in 2014 that will see it paid four times the current market price of power for every unit of electricity it generates for 15 years.

The National Audit Office was highly critical of the way in which the contracts were awarded without competition, concluding ministers had paid too much as a result.

It estimated that the Hornsea One project would require a total of £4.2 billion in subsidies, an average of about £280 million per year.

Consumers will be on the hook to pay subsidies to make up the difference between the market price of power - currently about £35 per megawatt-hour - and a guaranteed price, of £140/MWh.

These will be funded by households and businesses through green levies on their energy bills.

The market price of power has fallen significantly since the NAO made its estimates, suggesting the true cost may be even higher.

Less than a year after the contract for Hornsea was awarded, other proposed wind farms were forced to compete for subsidies, resulting in much lower prices.

The cheapest came in at less than £115/MWh, fuelling concerns that the Hornsea contract and other earlier deals may have been significantly too generous.

Dong Energy declined to reveal the total cost of construction of the project, while the Department of Energy and Climate Change declined to provide an estimate of its impact on a household energy bill.

Amber Rudd, the energy secretary, announced last year that the Government would make funding available for up to another 10 gigawatts of offshore wind farm capacity to be built in the 2020s, subject to cost reduction conditions.

These conditions have not been disclosed but Ms Rudd has vowed there will be "no more blank cheques" for offshore wind.

Welcoming the construction of Hornsea, Ms Rudd, said: "Thanks to Government support the UK is the world leader in offshore wind energy and this success story is going from strength to strength.

"Dong Energy’s investment shows that we are open for business and is a vote of confidence in the UK and in our plan to tackle the legacy of under-investment and build an energy infrastructure fit for the 21st century.

"This project means secure, clean energy for the country, jobs and financial security for working people and their families, and more skills and growth boosting the Northern Powerhouse."

Brent Cheshire, Dong Energy's UK country chairman, said: "Hornsea Project One is a world-leading infrastructure project being built right here in the UK. It is ground-breaking and innovative, powering more homes than any offshore wind farm currently in operation.

"We are making a major financial investment to construct this giant wind farm and this underlines our commitment to the UK market. Hornsea Project One will support the supply chain and help create local jobs.

"To have the world’s biggest ever offshore wind farm located off the Yorkshire coast is hugely significant, and highlights the vital role offshore wind will play in the UK’s need for new low-carbon energy."