Drop in wind energy costs adds pressure for government rethink
25th July 2017 | Commercial Energy
Onshore windfarms could be built in the UK for the same cost as new gas power stations and would be nearly half as expensive as the Hinkley Point C nuclear plant, according to a leading engineering consultant.
Arup found that the technology has become so cheap that developers could deliver turbines for a guaranteed price of power so low that it would be effectively subsidy-free in terms of the impact on household energy bills.
France’s EDF was awarded a contract for difference – a top-up payment – of £92.50 per megawatt hour over 35 years for Hinkley’s power, or around twice the wholesale price of electricity. By contract, Arup’s report found that windfarms could be delivered for a maximum of £50.55 per MWh across 15 years.
ScottishPower, which commissioned the analysis, hopes to persuade the government to reconsider its stance on onshore windfarms, which the Conservatives effectively blocked in 2015 by banning them from competing for subsidies and imposing new planning hurdles.
Keith Anders, the firm’s chief operating officer, told the Guardian that onshore wind could help the UK meet its climate targets, was proven in terms of being easy to deliver, and was now “phenomenally competitive” on price.
“If you want to control the cost of energy, and deliver energy to consumers and to businesses across the UK at the most competitive price, why would you not want to use this technology? This report demonstrates it’s at the leading edge of efficiency,” he said.
The Big Six energy firm believes that with a cap on top-up payments so close to the wholesale price, onshore windfarms would be effectively subsidy-free – but the guaranteed price would be enough to de-risk projects and win the investment case for them.
“What we asking for is a mechanism that underpins the investment risk,” said Anderson.
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