The Polish Energy Regulatory Office has awarded a Contract for Difference (CfD) to the F.E.W. Baltic II offshore wind project, which will have a planned installed capacity of 350 megawatts (MW). This confirms that RWE’s project has been selected for the first phase of Poland’s offshore wind build-out program. The CfD award is subject to final approval from the European Commission.
Back in December 2020, RWE signed a Grid Connection Agreement for the F.E.W. Baltic II project, which is located north of the Słupsk sandbank in the central Polish Baltic Sea exclusive economic zone. Subject to the final investment decision, construction works could commence as early as 2024. Once fully operational, the wind farm would be capable of producing enough green electricity to supply the equivalent of around 350,000 households.
The CfD mechanism provides green electricity projects with essentially a fixed inflation indexed ‘strike’ price for electricity over the project’s initial 100,000 hours of full load generation over up to 25 years of operation. If the electricity price is lower the state compensates the difference to the fixed bid price. If the electricity price exceeds the bid price, the wind farm operator must transfer the additional revenue to the state. This mechanism results in lower financing costs, which in turn lead to lower electricity costs for consumers.
