Tech advances make UK offshore wind cheaper than nuclear

A dramatic, 50 per cent fall in offshore wind costs has seen the cost of electricity fall to below that from nuclear plants largely due to technological advances such as more powerful turbines.

David Sapsted

11 September 2017

The latest government auction for new offshore wind farms in the UK has revealed the “truly astonishing” fact that the cost of production subsidies for the new projects has halved in the past two years, bringing the cost of electricity to below that from nuclear plants.

Strike prices have halved since 2015

The recent government auction, which guarantees the 'strike price' per megawatt hour (MWh) of electricity produced, saw contracts awarded to three offshore wind projects, including what will become the world's largest: Dong Energy's Hornsea Project Two, 55 miles off the Yorkshire coast, which will have the capacity to power 1.3 million homes and will receive a guaranteed strike price of £57.50 per MWh.In the 2015 auction, strike prices for offshore wind were between £114-£120 per MWh. The French-Chinese consortium building the new Hinkley Point C nuclear plant in Somerset have secured a guaranteed strike price of £92.50 per MWh.Industry experts said the dramatic, 50 per cent fall in offshore wind costs was largely attributable to technological advances, including the development of more powerful turbines and higher voltage cables, and to the growth in the UK supply chain.

Renewables are driving costs down

Emma Pinchbeck, executive director of the wind energy trade body RenewableUK, told the BBC the latest figures were “truly astonishing”, adding, “We still think nuclear can be part of the mix – but our industry has shown how to drive costs down, and now they need to do the same.”Michael Grubb, professor of energy policy at University College London, called the cost reduction “a huge step forward in the energy revolution”. He added, “It shows that Britain's biggest renewable resource – and least politically problematic – is available at reasonable cost.“It'll be like the North Sea oil and gas industry: it started off expensive, then as the industry expanded, costs fell. We can expect offshore wind costs to fall more, too.”Energy and Industry Minister Richard Harrington said, “We've placed clean growth at the heart of the Industrial Strategy to unlock opportunities across the country, while cutting carbon emissions.”Mr Harrington said the government would be setting out ambitious proposals to cash in on the industrial opportunities offered by low-carbon development in its forthcoming “clean growth plan”, due to be published in the autumn.

Wind is now cheaper than both nuclear and gas

Hugh McNeal, RenewableUK's chief executive, said the “record-breaking” cost reductions were unprecedented and made both onshore and offshore wind cheaper than both new nuclear and gas projects.“Today's results are further proof that innovation in the offshore wind industry will bring economic growth for the UK on an industrial scale,” he said, urging the government to continue to hold competitive auctions for future projects and to put wind at the heart of its industrial strategy.

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Matthew Wright, managing director for Danish-owned Dong Energy UK, described the successful auction as a “breakthrough moment” for offshore wind in the UK and said there was “so much more to come”.“Not only will Hornsea Project Two provide low-cost, clean energy to the UK, it will also deliver high-quality jobs and another huge boost to the UK supply chain,” he said.“Successive governments deserve great credit for providing the certainty for continued investment in offshore wind, enabling it to become the thriving renewable industry it is today.“Costs are falling rapidly, long-term and highly-skilled jobs are being created across the North of England and the UK supply chain is going from strength to strength,” he said, with “so much more to come”.Caroline Lucas, co-leader of the Green Party, said, “This massive price drop for offshore wind is a huge boost for the renewables industry and should be the nail in the coffin for new nuclear.“The government's undying commitment to new nuclear risks locking us into sky high prices for years to come. Put simply, this news should be the death knell for Hinkley C nuclear station.”But Tom Greatrex, chief executive of the Nuclear Industry Association, said one technology alone could not solve the UK's power challenge, and the full range of low-carbon energy would be needed to power UK homes and businesses. “It doesn't matter how low the price of offshore wind is. On last year's figures, it only produced electricity for 36 per cent of the time,” he said.For related news and features, visit our Enterprise section.Access hundreds of global services and suppliers in our Online Directory Get access to our free Global Mobility Toolkit

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