Wind-ustry chiefs cock-a-hoop over 50% cut in cost of generating electricity from offshore turbine farms

Hugh McNeal
Hugh McNeal

Renewable energy industry chiefs last night welcomed the massive cuts – up to 50% – in the cost of generating electricity from offshore wind as evidenced in the results of the ‘contract-for-difference’ energy contracts published by the Brit-Govt.

The cost of offshore wind has plummeted since the last competitive auction results were announced in February 2015, with the new prices on average 47% lower than they were just over two and half years ago.

The offshore wind prices announced yesterday are cheaper than the cost of the 35-year contracts for new nuclear power of £92.50 per megawatt hour, and cheaper than the levelised cost of gas, according to figures from the Department of Business, Energy and Industrial Strategy.  

A Contract for Difference (CFD) is a private law contract between a low carbon electricity generator and the Low Carbon Contracts Company (LCCC), a government-owned company.

The three offshore wind projects which were successful in the CfD auction are:

  • DONG Energy’s Hornsea 2 off the coast of Yorkshire
  • Innogy and Statkraft’s Triton Knoll off the coast of Lincolnshire, and
  • EDPR’s Moray Firth wind farm in northern Scotland. 

These new wind farms, with a total capacity of 3,196 megawatts, will power the equivalent of more than 3.3 million homes.

The Renewable Energy Association said the CfD auctions now show that renewable wind power is now the ‘most cost-effective form’ of new energy generation.

A spokesman commented: “The latest renewables auction show huge price reductions across the board, with offshore wind, energy from waste and biomass clearing at prices from £57.50-£74.75.

“These results show that renewables are now the most cost-effective form of any energy generation which can future proof both the UK grid and provide sustainable new jobs in the UK.

 “Offshore wind’s success shows what can happen with government support, and consider that this auction was for so called ‘less established’ technologies, with the more mature onshore wind and solar blocked to market. Now is surely the time for the government to commit to a low carbon industrial strategy.”

Hugh McNeal, Chief Executive, RenewableUK, said: “These results are astounding. Record-breaking cost reductions like the ones achieved by offshore wind are unprecedented for large energy infrastructure.

“These results also mean that both onshore and offshore wind are cheaper than gas and nuclear.

“Offshore wind developers have focused relentlessly on innovation, and the sector is investing £17.5 billiion into the UK over the next 4 years whilst saving our consumers money.

“The UK offshore wind sector – a world leader in a global renewable energy market currently worth $290 billion a year – needs to establish new trading opportunities as we leave the European Union <Brexit>.

“Meanwhile, tidal energy projects are already showing cost reductions and with the right encouragement can undergo the same sort of journey as offshore wind. Onshore wind is the cheapest from of new power, so it deserves an opportunity to compete too”.

See also:

Renewables After Brexit

Keynote energy and environment law UK conference:

1 Dec 2017 Dundee University

http://www.scottishenergynews.com/event/renewables-after-brexit-energy-law-and-policy-conference-dundee-1-dec-2017/

 

www.renewablesafterbrexit.co.uk
www.renewablesafterbrexit.co.uk

 

 

 

 

 

 

 

 

 

 

 

 

Lawrence Slade, Chief Executive, Energy UK, commented: “These exceptionally low results are further evidence of how the cost of clean energy is continuing to fall, and the move to a low carbon future is delivered at the lowest cost to consumers.

“This shows what can be achieved by providing the necessary certainty for investment, which drives down the cost of decarbonisation, benefits customers and the wider economy, and creates highly skilled jobs and stimulates growth in rural economies.

“The industry has shown it can deliver – with over a quarter of electricity generation now provided by renewables. We now need the Government to set out an ambitious, long-term plan for further decarbonisation in the Clean Growth Plan, as well as providing certainty around the timing for further auctions which allow for all technologies to compete for contracts.”

Keith Anderson, Chief Executive, Scottish Power, said: “The auction results show that offshore wind has aggressively reduced its costs, embracing the challenges set by Government. Further advances in technology will deliver even greater reductions in future auctions.

“The Government should be pleased the industry has delivered and, with a healthy pipeline of projects ready to go, they should on press on quickly with further auction rounds.”

 

12 Sept 2017

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