Cost of windpower electricity slashed by half – and below nuclear energy –  in latest government contracts

The 11 new clean-energy projects – including one in Scotland –  worth up to £176 million per year that have been successful in the latest competitive auction for renewable power technologies have been announced by the Brit-Govt.

Under the second round of the ‘contracts for difference’ auction, electricity from new offshore wind projects will be delivered as low as £58/MWh from 2022-23.

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

UK Energy Minister Richard Harrington, MP, said that these projects – which are set to generate over 3GW of electricity, enough to power 3.6 million home – demonstrate that the UK continues to be an ‘attractive place to invest in clean energy’ and added:

“Our competitive approach is continuing to drive cost reductions in the renewable energy industry.

“The cost of new offshore wind projects starting to generate electricity from 2022-23 is now 50% lower than the first auction held in 2015. The other successful technologies, Advanced Conversion Technologies and Dedicated Biomass with Combined Heat and Power, also achieved significant savings.

“Competition has also driven down the costs for consumers. The capacity delivered in this auction cost up to £528m per year less than it would have in the absence of competition.

“The offshore wind sector alone will invest £17.5 billion in the UK up to 2021 and thousands of new jobs in British businesses will be created by the projects announced today.

“This investment will help the UK meet its climate targets while supporting jobs in Britain’s growing renewable industry. The UK has the largest offshore wind capacity in the world and low carbon businesses have a combined turnover of £43 billion, employing 234,000 people.”

Gillian Martin, MSP,
Gillian Martin, MSP.

But the Scottish National Party – the third-largest in the Westminster parliament and which forms the minority SNP-led Scottish Government – accused him of being ‘obsessed’ with nuclear energy after the new figures revealed that energy from offshore wind would cost the government £57.50 per megawatt hour – while energy from new nuclear plants will cost £92.50 per megawatt hour.

SNP MSP Gillian Martin said: “The price of offshore wind energy has been falling for years – yet the Tories insisted on pushing ahead with their expensive white elephant project at Hinkley Point.
“Renewable energy is the future – offering sustainable jobs, economic growth and helping us tackle climate change and meet our environmental targets.
“The Tory obsession with nuclear power is frankly bizarre, particularly given the extortionate cost in comparison to new renewable projects.
“But it is hardly surprising – the Tory failure of our oil and gas sector shows just how little they understand the needs of our energy sector.”

The GMB trade union said that the strike prices of between £57.50 and £74.75 per MWh do not fully reflect the total costs borne by the consumer.

Justin Bowden, GMB National Secretary for Energy, said: “£10-£15 per MWh needs to be added to reflect the need for back-up capacity when the wind is not blowing during a period of high demand and the cost of wasted generation when there is too much wind.

“While we welcome the price of wind starting to come down, decision-makers should keep their feet nailed firmly to the ground so as not to get blown away by all the hot air coming out from those suggesting Britain can rely on renewables energy sources given that the wind and solar fleets combined produce almost no electricity for nearly half the time.

“A balanced energy mix of nuclear, (hydraulically fracked) onshore gas and renewable energy sources is the only way of ensuring continuity of supply.

“Until there is a breakthrough in carbon capture and storage then the reliable base load capacity nuclear and gas can bring for all those of days and nights when the wind doesn’t blow and the sun doesn’t shine is crucial.”

12 Sept 2017

Pixie Energy

Pixie logo Pixie Energy is an incubator and a facilitator of strategic research and project work, focusing on energy regulation, policy and markets at the local and national level. Find out more about Pixie Energy here.

Local Energy Matters: Scotland

Local Energy Matters: Scotland is a free-to-download brochure with a focus on energy tariffs in the two Scottish electricity distribution regions, as well news on local energy and low-carbon schemes.

Previous editions can be download here.

Scottish energy market overview

You can read an overview of the Scottish energy market here.

Scottish Government energy feed