Northland Power said Tuesday that Poland’s Energy Regulatory Office had awarded a contract for difference (“CfD”) for Northland and PKN ORLEN’s (“ORLEN”) Baltic Power offshore wind project.
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 gigawatts (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."
Similar to previous announcements, the CfD is awarded at PLN 319.60 (~70.54 Euro at current exchange) 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.
On March 24, 2021, Northland completed its acquisition of a 49% interest in Baltic Power from ORLEN. The project is expected to have a total capacity of up to 1,200 megawatt (MW) of offshore wind generation with construction activities expected to start in 2023 and commercial operations anticipated in 2026.
"Poland provides an attractive investment destination with a clear roadmap for offshore wind and other renewable technologies and its 2040 energy policy highlights offshore wind as a key technology to help its transition to a low-emission economy," Northland Power said.
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, the company said.