Denmark's Dong Energy has been awarded a contract to build its 1.4 gigawatt (GW) Hornsea project two to create the world's largest offshore wind farm.
The strike price, or guaranteed price for the power it will supply, was set at £57.50 per megawatt hour (MWh), which is 50 per cent lower than the previous auction just two years ago.
Dong won the contract for its massive wind farm during a British auction for renewables. The UK replaced direct subsidies for renewable power with a contracts for difference system as part of reforms to its electricity market.
Dong is currently building the first phase of the Hornsea project, which has a capacity for 1.2 GW and was guaranteed a price of £140 per MWh.
Phase two of the project, which will be built 89 kilometres off the Yorkshire coast, will produce enough energy to power over 1.3m UK homes. It is expected to be operational from 2022.
"This is a breakthrough moment for offshore wind in the UK and a massive step forward for the industry. Not only will Hornsea project two provide low cost, clean energy to the UK, it will also deliver high quality jobs and another huge boost to the UK supply chain," said Matthew Wright, managing director for Dong Energy UK.
Dong has already started the consultation process for Hornsea project three.