The target, set in 2012, was expected to be met by 2020, but wind farms given final investment decision in 2015-16 are already achieving prices lower than this target.
This rapid reduction is tracked in the third annual cost-reduction monitoring report from the Offshore Wind Programme Board. The industry is now focusing on further cost reduction, growth and job creation, says the report.
Offshore wind costs have fallen sharply through the adoption of larger turbines, increased competition and lower cost of capital. Projects are reaching a final investment decision in 2015-16 with an average cost of £97-MWh, compared to £142-MWh five years ago.
Since 2010, over £9.5 billion has been invested in offshore wind in the UK and another £18 billion will be invested in projects by 2021, making offshore wind the sixth biggest infrastructure programme in the UK. Offshore wind generates 5% of the UK’s electricity, and by 2021 this will double to over 10%.
Offshore Wind costs differ across Europe due to differing regulating regimes. Considerably more development costs are borne by other European Governments than is the case in the UK. Across much of Europe, development of sites, including survey, consent and grid connection, are undertaken by the State in question, significantly reducing the risk and cost undertaken by the ultimate site developers.
But British Energy Minister, Jesse Norman, MP, commented: “Thanks to the efforts of developers, the UK’s vigorous supply chain and support from Government, renewables costs are continuing to fall. Offshore wind will continue to help the UK to meet its climate change commitments, as well as delivering jobs and growth across the country.”
“The UK’s leadership in offshore wind clearly demonstrates that it is an attractive destination for renewable energy investment. This growing industry will be an important part of the Government’s new industrial strategy, and will be underpinned by £730 million of annual support for renewable energy over the course of this parliament.
Benj Sykes, joint Chairman of the Offshore Wind Industry Council, said: “Offshore wind is a big success story at the very heart of the UK’s industrial strategy. The industry is cutting costs much faster than predicted, while creating thousands of jobs and stimulating investment nationwide.
“But this is a story that is just beginning. We remain committed to delivering further significant cost reduction, while working in partnership with Government to put in place a Sector Deal and build a sustainable industry that will benefit the UK for decades to come. Our industry’s goal is to be cost competitive with other generation sources, and this new data shows that ambition is realistic and that we are well on the way to achieving it.”