The cost of offshore wind power is in a rapid downward spiral

Thanet Offshore Wind Farm, Thanet, Kent, UK

The Thanet Offshore Wind Farm in the UK. Photo credit: Will Rose / Greenpeace.

By Anders Lorenzen

One of the youngest renewable energy technologies has for a long time remained one of the most expensive. But new figures from the UK government detail that this is quickly changing. It was revealed by the Department for Business, Energy and Industrial Strategy (BEIS) that two new offshore wind power projects have been accepted with a strike price of £57.50. This marks a stark contrast to the controversial UK nuclear power plant project Hinkley Point C, where the strike price is much higher, at £92.50. This means that in just two years the price paid for electricity generated by offshore wind turbines has nearly halved, roughly a reduction of 47%. For the first time, some offshore wind projects are now cheaper than some nuclear energy projects, and could even rival natural gas.

Several things have contributed to this feat, which has surprised many in the energy sector.

Greenpeace UK believes this has happened due to the offshore wind sector has transformed itself over the last decade. The environmental group also offered rare praise for the UK government, stating that the government’s support, as well as huge strides made in homegrown manufacturing capacity (such as the offshore wind turbine factory in Hull), paired with increases in turbine efficiency and blade size all, contributed to the drastic price reduction. Greenpeace believes these combined factors have placed the UK as a world leader in offshore wind power.

The trade body for the renewable energy industry, Renewable UK, say that they were pretty confident the figures were going to be good, but were even pleasantly surprised themselves. Their Chief Executive, Hugh McNeal, commented: “We knew today’s results would be impressive, but these are astounding. Record-breaking cost reductions like the ones achieved by offshore wind are unprecedented for large energy infrastructure. Offshore wind developers have focused relentlessly on innovation, and the sector is investing £17.5bn into the UK over the next four years whilst saving our consumers money”.

Mr McNeal hopes that other emerging renewable energy technologies will be able to match the feat: “It’s great to see these excellent results for offshore wind. It’s important that innovative renewable technologies, including wave energy and tidal energy projects also have a route to market, so different mechanisms are needed to ensure these cutting-edge technologies can develop. Tidal energy projects are already showing cost reductions and with the right encouragement can undergo the same sort of journey as offshore wind. Onshore wind is the cheapest from of new power, so it deserves an opportunity to compete too”.

One of the world’s leading offshore wind installers, Denmark’s Dong Energy, believe commitments to offshore wind are starting pay off. Managing Director for the UK arm of the company, Matthew Wright, said: “This is a breakthrough moment for offshore wind in the UK and a massive step forward for the industry. 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. We’re now really seeing the benefits of this commitment to offshore wind and there is still so much more to come.”

The ability of one turbine to generate more electricity is also a large part of the cost reduction process. Today’s newest offshore wind turbines are capable of generating 8 megawatts (MWs) of electricity per turbine, more than doubling their efficiency compared to ten years ago and have moved significantly forward since Dong Energy erected the first offshore wind farm twenty-five years ago. Back then one turbine was able to produce a comparatively modest 450KW, near enough one-sixteenth of their current counterparts output. Moving forward the forecast states that by the mid-2020’s one offshore wind turbine will have a 15 MW capacity. An impressive outlook, sure to further drive down costs and attract investment in offshore wind power.

Greenpeace believes we are witnessing a revolution in the offshore wind industry. Hannah Martin, their Head of Energy said: “This record-breaking price drop from offshore wind marks a huge moment for the UK energy sector. The price of offshore wind power is 50% cheaper than just two years ago, this means we are witnessing a revolution in UK energy. Offshore wind already powers 4 million homes in the UK, and will power more than 8 million by 2020. It has also created jobs, regional development and export opportunities. And official polls show that 80% of people are in favour of offshore wind. The government needs to seize the opportunities of this great deal, which they themselves have helped to create.”

While offshore wind farms are large industrial projects they can be constructed fairly quickly, in just two or three years, and will then run for approximately 25 years.

This news, while referring to the UK market, will undoubtedly gather worldwide attention, particularly on the US east coast. An area only just starting to develop offshore wind, with Dong Energy having recently opened an office in Boston.

 

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5 responses to “The cost of offshore wind power is in a rapid downward spiral

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