The UK offshore wind power industry has recently highlighted the dramatic fall in the cost of offshore wind. Surprisingly, the costs have plummeted sufficiently low and have deemed offshore wind power to now be cheaper than the electricity from new nuclear power. For the first time, the cost of subsidies for new offshore wind farms have fallen 50% since the last auction in 2015 for clean energy projects.
Statistics claims that the cost for offshore wind power projects delivered between 2021-2022 was EUR 74.75 per megawatt-hour, while those slated to generate between 2022-2023 were granted contracts for a subsidy of just EUR 57.50 per megawatt-hour. This milestone is a huge boon for the renewable energy industry and has been achieved far earlier than expected.
The renewable energy companies revealed that the higher voltage cables, bigger turbines, and improved infrastructure in recent years are more powerful than their predecessors and are thus responsible for the tumbling prices of offshore wind power. For the record, the new prices are about 47% lower when compared with the prices prior to two and half years. Basically, with the possibility of fewer turbines generating more power, the costs of installing and maintaining wind farms have dramatically reduced.
The Department for Business, Energy & Industrial Strategy’s statistics were released after an auction for subsidies, in which the companies that submit the lowest bid secure the deal. In a latest auction, Dong Energy with an offer of EUR 57.50 per megawatt hour for offshore wind power was one of the winners. This marked a breakthrough moment and a massive step forward for offshore wind industry in the UK. Dong Energy is expected to provide low cost, clean energy to UK from its Hornsea Project Two offshore wind farm. Industry experts also predict high quality jobs and significant upliftment to the UK workforce.
Apart from Dong energy, 11 renewable energy projects won contracts which include Innogy and Statkraft’s Triton Knoll, and EDPR and ENGIE’s Moray off the northeast coast of Scotland. These new wind farms projects are expected to deliver over 3 gigawatts of capacity which is equivalent to power more than 3.3 million homes.
However, even with cost competitive prices of offshore wind, it is pretty understandable that one technology won’t be able to solve the UK’s power challenge. If experts are to be believed, because of the intermittent nature of wind power, nuclear energy would still be needed. Nevertheless, in a bid to find the most cost effective and reliable energy mix, this announcement of record low costs of offshore wind is likely to spark fresh calls for ministers to scale up the investments in renewable energy projects.
Ojaswita Kutepatil develops content for Market Size Forecasters. A mechanical engineer by qualification, worked as a BDE and Technical Engineer before switching her profession to content writing. As an Associate Content writer, where she pens down write-ups pertaining to the market research industry...