UK government subsidies for offshore wind farms are set to fall below the £92.5 MW-hr to be paid to EDF for its proposed new £18-billion Hinkley nuclear power plant.
According to Clark MacFarlane, Siemens’ managing director for offshore wind, this is because of both government policy to cut household energy bills and because of greater economies of scale by and lower-cost improvements in turbine technology.
Speaking to Reuters, he said: “Britain’s government is under pressure to bring down users’ electricity costs at the same time as subsidising low-carbon generation to help meet its carbon emission reduction targets and plug a looming supply gap.
“The next government auction setting prices for new renewable power projects opens next month (April 2017) and this could see offshore wind costs fall below new nuclear for the first time.
“I predict the price for offshore wind in the upcoming auction will be lower than that given to Hinkley <nuclear power plant>
“The price will keep coming down, as we find better logistic solutions, new grid solutions, as well as bigger turbines.
“Increasing the size of wind turbines means automatically cutting the number of turbine towers and foundations needed to produce the same amount of electricity, thereby reducing unit and operating costs.”
However, the subsidy of £92.5 pounds per megawatt hour for the Hinkley electricity is more than double the current wholesale price of electricity.
Meanwhile, a new report published today (16 March) by the Committee on Climate Change – the British Government’s advisory body – highlights the benefits that wind and marine energy bring to the economy by growing new industries, and to consumers by providing insurance against volatile international fossil fuel prices.
The study, “Energy Prices and Bills 2017 – impacts of meeting carbon budgets” states that having renewables on the system drives down bills by providing more competition among a wide range of energy sources.
It notes that offshore wind costs have fallen dramatically and will continue to do so, and that onshore wind offers a cost-effective way to keep bills down, so it is one of the technologies which can provide new generation in the 2020s.
Renewable UK’s Executive Director Emma Pinchbeck commented:” This report highlights the fact that the UK’s low-carbon sector is growing faster than the rest of the economy, already employing hundreds of thousands of people and contributing 2-3% of GDP, which is comparable in size to energy-intensive manufacturing”.
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