1.2 GW Baltic Power Offshore Wind Farm Secures Contract for Difference

Poland’s Energy Regulatory Office has awarded a contract for difference (CfD) to the 1.2 GW Baltic Power offshore wind project.

Baltic Power is owned and developed by Poland’s PKN Orlen and Canada’s Northland Power.

Under the 25-year contract, the project will receive payments covering any negative balance of electricity generated offshore and fed into the grid, which means that Baltic Power will be compensated for the potential difference between the market price of electricity and the strike price set in the CfD.

The award is part of the Polish government’s commitment, through the Polish Offshore Wind Act, to support an initial phase of 5.9 GW of offshore wind.

”We are extremely proud to be developing a significant offshore wind project in Poland, alongside our partner, PKN Orlen to support the country in its decarbonization objectives,” said Mike Crawley, President and Chief Executive Officer of Northland.

”The CfD is a key milestone that provides the project with revenue certainty to proceed with development and confirms our inclusion in the initial phase of offshore wind development in Poland. Full scale development of Baltic Power will expand our European offshore wind presence and help us to establish an offshore wind hub in the Baltic Sea.”

The CfD is awarded at PLN 319.60 per MWh for up to 25 years and is adjusted to annual indexation by Poland’s annual average consumer price index. The CfD is subject to review and final approval from Polish authorities and the European Commission.

Northland completed its acquisition of a 49 per cent interest in Baltic Power from Orlen in March. The construction activities are expected to start in 2023 and commercial operations are anticipated in 2026.

Poland’s Offshore Wind Act, which was passed earlier this year, specifies its ambitions for offshore wind and its commitment to install 5.9 GW by 2030, and up to 11 GW by 2040, making Poland the biggest market for offshore wind in the Baltic region and an attractive market for offshore wind investment.

Earlier this year, the Energy Regulatory Office awarded CfDs to the 1 GW Baltica 3 and 1.5 GW Baltica 2 offshore wind projects, developed by Ørsted and PGE; to the 350 MW FEW Baltic II offshore wind project, developed by Baltic Trade and Invest Sp. z o. o., a subsidiary of the German energy company RWE; and to Equinor and Polenergia’s Bałtyk II and Bałtyk III projects with a combined capacity of 1,440 MW.

In total, Energy Regulatory Office awarded CfDs to projects with a combined capacity of around 5.5 GW in the first phase of the development scheme scheduled to run by June 2021, with around 400 MW of capacity left to be awarded for projects in the most advanced stage of development.