There has been a welcome boost for the renewable industry in the UK as wind farm costs are set to fall to record lows, as reported by the Guardian.
These new lows were set after a recent subsidy auction and green groups say the move will spell the end for Hinkley Point nuclear power station, currently being built. The new record low prices are expected early next decade and comes after aggressive bidding from developers for government subsidies.
The expected strike price guaranteed for these wind farms is estimated at between £70 and £80 per megawatt per hour. This falls well below the £92.50 of the nuclear power station at Hinkley Point.
Two offshore farms will receive £57.50 Per MWh of power they supply, which falls below even the lowest of forecasts. This represents an almost 50% decrease in prices from what was being awarded in 2015.
The subsidies will be paid for consumers through energy bills and will result in thousands of jobs being created. Ministers also say that these farms will provide enough clean power for over 3.5 million homes.
V#British Minister for Energy, Richard Harrington, said: “The offshore wind sector alone will invest £17.5bn in the UK up to 2021 and thousands of new jobs in British businesses will be created by the projects announced today.”
It is thought that this boost for the renewable sector will also fuel a debate on whether ministers should rethink their commitment to using nuclear power to help supply the country’s energy needs and meet carbon targets.
Green party co-leader, Caroline Lucas, said the drops are a huge boost for the industry and said commitment to nuclear energy by the government will mean high prices in the coming years.
“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.”, she said.
Before adding, “While clean, green wind power has the potential to seriously cut people’s bills – the government’s undying commitment to new nuclear risks locking us into sky-high prices for years to come.”
The lower the price, the more electricity generating capacity can be achieved. £240 million per year in subsidies has been allocated by the government, though this could be lowered to £176 million with prices now competitive.
German developers, Innogy, were one company to win the bidding and they will receive £74.75 per MWh from Triton Knoll. They received this higher price as it will deliver earlier, in 2021/22. Dong Energy of Denmark won at £57.50 per MWh for its Horsnea farm, while EDP of Spain won and will receive £57.50 p/MWh of energy from the Moray wind farm off the Scottish coast. These two projects are due to deliver in 2022-2023
The overall generating capacity of the new projects will be the same as the Hinkley Point C station, at 3.2GW. While Triton Knoll should be up and running at least two years prior to Hinkley’s reactors.
Managing director for Dong Energy UK,Matthew Wright, said: “This is a breakthrough moment for offshore wind in the UK and a massive step forward for the industry.”
The move also means that the prices for building such farms has fallen by over a third in five years. Developers now believe this will make way for the production of bigger turbines, which will then mean further cost reductions.
“Offshore wind’s success was undoubtedly buoyed by the decreasing costs of capital in the sector and the wider downward trend of subsidy levels witnessed in other European tender processes,” said Robert Marsh of Norton Rose Fulbright.
Lawrence Slade, the chief executive of Energy UK, said, “Today’s exceptionally low results are further evidence of how the cost of clean energy is continuing to fall, and the move to a low carbon future is delivered at the lowest cost to consumers.”
Mr Slade then called on the British government to outline their long term plans for carbon emission cuts and to provide more certainty around future auction times.
Reports suggest a further £440m per year has been allocated for future auctions to be held in 2020, though this has yet to be confirmed.
Ireland are inline to meet 2020 EU renewable electricity targets. Ireland must use 1,000 MW of offshore wind by 2020 in order to comply with the 40% target.
Last year over €308 million was raised through a household levy. This will be granted to supporting domestic renewable energy schemes throughout the country. Arlow bank wind park is currently the countrys only offshore windfarm.