A new wind-ustry report has provided strong evidence that the cost of energy from offshore wind continued to fall last year and remains on track to deliver the target of £100/MWh by 2020.
This would put wind power on a level similar to with the proposed price presently offered by the UK government to the operators of the new Hinkley Point-C nuclear power station (if it actually gets built).
The report also identifies forthcoming announcements by DECC on timing and scale of future Contracts for Difference (CfD) auctions and long term capacity requirements as key enablers of further cost reduction.
The second annual Cost Reduction Monitoring Framework (CRMF) report, delivered by the Offshore Renewable Energy Catapult on behalf of the Offshore Wind Programme Board, shows that investment in turbine technology has delivered significant cost benefits, but that further reduction will need to come from the innovations in ‘balance of plant’, such as foundations, cables and substations.
Of the 13 cost reduction indicators in the report, all but one is ahead or on target with the milestone set for 2015. The only measure that is behind target is growth and scale. Findings show that industry has already adopted innovations that were not previously expected to significantly drive cost reduction until 2017, particularly in the areas of turbine design and project maintenance.
Investment in research and development and manufacturing industrialisation to deliver such improvements, the report warns, will only come with greater visibility of future rates of deployment and market size as Government sets out details of contracts for new offshore wind farms.
The report also assessed the degree of confidence that the industry has in delivering further cost savings. It found ‘high confidence’ of delivery in eight of the indicators, with medium confidence in a further three, to achieve the milestone of £100/MWh in 2020.
The report is released at the same time as the UK Parliament reviews the 5th Carbon Budget of the Committee on Climate Change, which projects that offshore wind costs will be below new nuclear and new gas plant by 2025.
Junior British Energy Minister, Andrea Leadsom commented: “The UK offshore wind industry continues to go from strength to strength and I’m delighted to see further evidence that costs are continuing to come down. Reductions in cost will mean better value for hard working bill payers, and are essential if this industry is to thrive”.
Benj Sykes, industry joint-chairman of the Offshore Wind Industry Council, said: “We have continued to see excellent progress in reducing the cost of clean energy from offshore wind. The industry is fast-tracking adoption of new innovation in turbine design and in project operations, putting us ahead of the curve in efforts to bring down the cost of offshore wind.
“We are very confident that not only can we reach our £100/MWh milestone, but also to go beyond this to become fully cost competitive with other generation technologies.
Jonathan Cole, Chairman, Offshore Wind Programme Board said: “Offshore wind is delivering jobs and economic benefit to the UK right now.
“This report shows that consumers and Government can be confident that the cost of offshore wind will continue to reduce and that offshore wind is the ideal way to produce the large quantities of clean, reliable energy that the UK needs”.