BVG Associates have released a new report saying that the Government could save the offshore wind industry costs by £1.9 billion in the 2020s by demonstrating greater confidence and visibility.
The study was commissioned by the Committee on Climate Change. Its main message is that simply by giving better visibility and confidence of future levels of deployment to the offshore wind industry, the Government could cut £1.9 billion from the cost to UK energy users of offshore wind projects built between 2021 and 2030.
Further, the study shows that an accelerated programme of deployment would generate 35% more electricity in 2030, at a minimal cost increase to UK energy users. It also shows that the cost of offshore wind energy could fall to around £80/MWh for projects first generating in 2030.
By then, it will already be cost competitive with other new-build electricity generation technologies, including combined cycle gas turbines.
BVG Associates is an independent environment-energy consultancy. It has a Scottish base in Aberdour, Fife.
Chris Willow, lead-author of the report, said: “The CCC set us a tough challenge, to unpick the impact of government policy on a diverse supply chain in a dynamic sector. With the help of deep engagement with industry, we have for the first time separated a range of different policy drivers and quantified their impact on each of the key areas of that supply chain.
“We hope that in being robust and transparent, we will provide real substance into the discussion between industry and governments, as they work together to establish a way forward for cost effective energy generation in Northern Europe.”
This study is groundbreaking in being the first published work to quantify robustly the impact of policy on cost of energy in offshore wind looking to 2030. It is based on detailed engagement with industry at a senior level and transparent modelling of the impact of policies on each element of supply, taking into account the interactions between the UK and other European markets.
Bruce Valpy, Project Director, said: “The offshore wind industry has long said that visibility and confidence have a huge impact on investment and cost reduction. Here is the industry’s best attempt at providing the evidence.
“A strong relationship between a growing industry and governments wanting low-cost, low-carbon, home-grown energy and strong local benefit can achieve a great deal. We are committed to helping both sides grow that relationship.”
The report identifies the key elements of a policy strategy for offshore wind in the 2020s that balances effectiveness in cost of energy reduction with efficiency in minimising support cost to UK energy users. The analysis covers a set of inclusive, holistic policy options including market scale, visibility, publicly funded R&D and other government-led interventions.