RenewableUK, the renewable energy trade association in the U.K., is highlighting the dramatic fall in the cost of offshore wind, which, according to the results of the country’s latest competitive auction for renewable technologies, is cheaper than the cost of nuclear.
The Department for Business, Energy and Industrial Strategy has announced that three offshore wind projects were successful in the auction, as they put in the lowest bids for contracts for difference (CfDs). The winning projects are DONG Energy’s Hornsea 2 off the coast of Yorkshire, Innogy and Statkraft’s Triton Knoll off the coast of Lincolnshire, and EDPR and ENGIE’s Moray off the northeast coast of Scotland. The new wind farms, with a total capacity of 3,196 MW, will power the equivalent of more than 3.3 million homes, says RenewableUK.
The cost of offshore wind has plummeted since the last competitive auction results were announced in February 2015; on average, the new prices are 47% lower than they were just over two and half years ago, according to the association. Importantly, the offshore wind prices are cheaper than 35-year contracts for new nuclear power of 92.50 British pounds/MWh and cheaper than the levelized cost of gas, according to figures from the Department of Business, Energy and Industrial Strategy.
Hornsea 2 and Moray will begin generating in 2022/23 at 57.50 British pounds/MWh and Triton Knoll in 2021/22 at 74.75 British pounds/MWh. Prices are guaranteed for 15 years of an expected project life of 25 years.
“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,” says Hugh McNeal, RenewableUK’s chief executive. “Offshore wind developers have focused relentlessly on innovation, and the sector is investing 17.5 billion British pounds into the U.K. over the next four years whilst saving our consumers money.”