The costs of offshore wind power generation could be brought down by one-third by the end of the decade, making this form of renewable energy commercially viable in the UK, according to new reports by the wind industry and government.
The findings are the latest salvo in the fierce battle over wind power, as critics tussle with wind proponents, ministers and environmental campaigners over the role it plays in UK's energy mix, with billions of pounds of investment at stake.
If realised, the steep drop in price would reduce the cost of using offshore wind by more than £3bn a year, and to generate one-fifth of the UK's electricity – in line with government targets.
Ministers have said about 18GW of offshore wind capacity should be built by 2020, more than an eight-fold increase on today's capacity.
But at present, offshore wind is still one of the most expensive forms of renewable power, costing up to three times higher than onshore windfarms.
Offshore generation costs – of about £140/MWh today – could drop to about £100/MWh by 2020, according to the reports published on Wednesday by the Crown Estate, which sells licences to build offshore wind farms, and from the Offshore Wind Cost Reduction Task Force, set up by the Department of Energy and Climate Change with the wind industry.
The high cost of offshore wind generation has been used by critics, particularly on the right of the Tory party, who have decried plans for more turbines at sea in favour of a new "dash for gas" to build a large new fleet of gas-fired power stations around the country.
Gas power that started operation in 2021 would cost around £88/MWh, according to government figures. David Cameron has come under pressure to cut subsidies for both onshore and offshore wind energy generation.
Charles Hendry, minister of state for energy, said lower costs would be a fillip to the technology's prospects: "Offshore wind will be a vital part of a diverse and secure low-carbon energy mix in the decades ahead – but we are clear that costs must come down.
This report shows substantial cost savings can be achieved if action is taken." But these cost reductions will only come about if industry and government both make concerted efforts, the report's authors found.
Maria McCaffery, chief executive of RenewableUK, said: "Driving down costs is much more than a mere aspiration – the industry is working closely with key stakeholders such as the Crown Estate to chart the course ahead, laying out action plans which are credible and achievable.
This will enable the sector to grow from strength to strength – not only generating low-carbon electricity and giving us a secure supply of energy, but also creating tens of thousands of jobs and revitalising manufacturing throughout the UK."
However, even if the cost reductions are achieved, offshore wind is likely to remain more expensive than other forms of power, and in need of government support in order to encourage investors.
The Crown Estate said in its report that bringing down the cost as rapidly as envisaged would require bigger turbines, greater competition among suppliers, better windfarm design, economies of scale, improved installation methods, the mass production of deep water foundations, and the industry to prove it can reduce risk to investors.
The advice came, however, as one major wind investor warned that uncertainty over government energy policy, and the potential for politically motivated changes to subsidy regimes, was making the UK a less attractive proposition for wind investors.
Keith Anderson, chief corporate officer at Scottish Power, said that the prospect of the government meddling and making sudden changes to financial support mechanisms for the industry was in danger of spooking financial backers.
"[Such changes] could set an unwelcoming precedent for the UK energy sector and potentially have an adverse effect on investor confidence at a critical time for the UK energy industry," he said.
"Up until now, we have prided ourselves [in] not having to factor in political risk to our UK investment decisions, but perhaps it is something we may need to consider in the future as we seek to invest billions of pounds in offshore, onshore and marine renewable energy projects.
We want to help the UK achieve its carbon reduction targets, and to do this we need certainty and consistency in energy market regulation."
guardian.co.uk
The findings are the latest salvo in the fierce battle over wind power, as critics tussle with wind proponents, ministers and environmental campaigners over the role it plays in UK's energy mix, with billions of pounds of investment at stake.
If realised, the steep drop in price would reduce the cost of using offshore wind by more than £3bn a year, and to generate one-fifth of the UK's electricity – in line with government targets.
Ministers have said about 18GW of offshore wind capacity should be built by 2020, more than an eight-fold increase on today's capacity.
But at present, offshore wind is still one of the most expensive forms of renewable power, costing up to three times higher than onshore windfarms.
Offshore generation costs – of about £140/MWh today – could drop to about £100/MWh by 2020, according to the reports published on Wednesday by the Crown Estate, which sells licences to build offshore wind farms, and from the Offshore Wind Cost Reduction Task Force, set up by the Department of Energy and Climate Change with the wind industry.
The high cost of offshore wind generation has been used by critics, particularly on the right of the Tory party, who have decried plans for more turbines at sea in favour of a new "dash for gas" to build a large new fleet of gas-fired power stations around the country.
Gas power that started operation in 2021 would cost around £88/MWh, according to government figures. David Cameron has come under pressure to cut subsidies for both onshore and offshore wind energy generation.
Charles Hendry, minister of state for energy, said lower costs would be a fillip to the technology's prospects: "Offshore wind will be a vital part of a diverse and secure low-carbon energy mix in the decades ahead – but we are clear that costs must come down.
This report shows substantial cost savings can be achieved if action is taken." But these cost reductions will only come about if industry and government both make concerted efforts, the report's authors found.
Maria McCaffery, chief executive of RenewableUK, said: "Driving down costs is much more than a mere aspiration – the industry is working closely with key stakeholders such as the Crown Estate to chart the course ahead, laying out action plans which are credible and achievable.
This will enable the sector to grow from strength to strength – not only generating low-carbon electricity and giving us a secure supply of energy, but also creating tens of thousands of jobs and revitalising manufacturing throughout the UK."
However, even if the cost reductions are achieved, offshore wind is likely to remain more expensive than other forms of power, and in need of government support in order to encourage investors.
The Crown Estate said in its report that bringing down the cost as rapidly as envisaged would require bigger turbines, greater competition among suppliers, better windfarm design, economies of scale, improved installation methods, the mass production of deep water foundations, and the industry to prove it can reduce risk to investors.
The advice came, however, as one major wind investor warned that uncertainty over government energy policy, and the potential for politically motivated changes to subsidy regimes, was making the UK a less attractive proposition for wind investors.
Keith Anderson, chief corporate officer at Scottish Power, said that the prospect of the government meddling and making sudden changes to financial support mechanisms for the industry was in danger of spooking financial backers.
"[Such changes] could set an unwelcoming precedent for the UK energy sector and potentially have an adverse effect on investor confidence at a critical time for the UK energy industry," he said.
"Up until now, we have prided ourselves [in] not having to factor in political risk to our UK investment decisions, but perhaps it is something we may need to consider in the future as we seek to invest billions of pounds in offshore, onshore and marine renewable energy projects.
We want to help the UK achieve its carbon reduction targets, and to do this we need certainty and consistency in energy market regulation."
guardian.co.uk
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