The cost of Wind Power continues to fall

The cost of Wind Power continues to fall

Like all new technologies when they first enter the commercial market, wind turbines were costly and therefore the cost of generating electricity from them was higher than the more established methods. Over time the cost started to fall as the technology became more widely used and more widely understood and this pattern continued as more turbines were installed throughout the country.

However certain factions continued to claim that the cost of generating electricity via wind was high, particularly in relation to other more traditional methods of generation.  They had their reasons for perpetuating this false claim but such was their influence that when discussing our industry with those on the outside we were often asked ‘isn’t that very expensive?’ and ‘doesn’t that mean higher costs for consumers?’

This myth however was shattered this week in a new round of CfDs (Contracts for Difference) for the energy sector in which two energy companies proposed to build offshore wind farms and generated electricity for export to the grid for a guaranteed price of £57.50 per megawatt hour.

In comparison the proposed new nuclear power plant Hinkley Point C has secured a guaranteed price of £92.50 per megawatt hour.

Emma Pinchbeck, from the wind energy trade body Renewable UK, speaking to the BBC about the latest figures said they were “truly astonishing”.

“We still think nuclear can be part of the mix – but our industry has shown how to drive costs down, and now they need to do the same.”

The nuclear industry unsurprisingly agree and state that due to the intermittency of wind power and the winding down of carbon intensive generation nuclear is needed now more than ever.

Tom Greatrex, chief executive of the Nuclear Industry Association (NIA) also speaking to the BBC, said: “It doesn’t matter how low the price of offshore wind is. On last year’s figures it only produced electricity for 36% of the time.”

EDF, which is building the Hinkley Point C nuclear plant, said the UK still needed a “diverse, well-balanced” mix of low-carbon energy.

“New nuclear remains competitive for consumers who face extra costs in providing back-up power when the wind doesn’t blow or the sun doesn’t shine. There are also costs of dealing with excess electricity when there is too much wind or sun,” a spokesperson for the multinational said.

They also stated that like wind, energy from nuclear power will become less expensive as markets mature however history has taught us that this isn’t the case as the cost of generating electricity via nuclear power has continued to rise since the 1950s.

Also both EDF and the NIA conveniently forgot to mention the rise of battery storage which in its many forms is tackling the problem of intermittency head-on without the production of dirty nuclear waste and the potential threat of meltdown.

Dong Energy were one of the two companies to successfully bid for the contract for phase two of what will become the world’s largest offshore, the 1.4 gigawatt Hornsea project.

Dong is currently building the first phase of the Hornsea project, which has a capacity for 1.2 GW and was guaranteed a price of £140 per MWh. Phase two of the project, which will be built 89 kilometres off the Yorkshire coast, will produce enough energy to power over 1.3m UK homes. It is expected to be operational from 2022.

“This is a breakthrough moment for offshore wind in the UK and a massive step forward for the industry. Not only will Hornsea project two provide low cost, clean energy to the UK, it will also deliver high quality jobs and another huge boost to the UK supply chain,” said ​Matthew Wright, managing director for Dong Energy UK.

Dong has already started the consultation process for Hornsea project three which will add more jobs and income to the UK economy and if completed along with the first two phases will generate enough power for 3.6million homes.

The Department for Business, Energy and Industrial Strategy’s figures were released after an auction for subsidies, in which the lowest bidder wins. In 2015, offshore wind farm projects won subsidies between £114 and £120 MWh meaning that in the two years since offshore wind subsidies have fallen by at least 50% with the reductions attributed to the downturn in the oil and gas sector, the availability of larger turbines and a more competitive supply chain leading to lower costs across the renewable sector.

Lawrence Slade, chief executive of energy industry body Energy UK, called on ministers to build on the UK’s lead in renewables.

He said: “This (auction) shows what can be achieved by providing the necessary certainty for investment, which drives down the cost of decarbonisation, benefits customers and the wider economy, and creates highly skilled jobs and stimulates growth in rural economies.”

Caroline Lucas, the co-leader of the Green Party, said the figures achieved should be the “nail in the coffin” for new nuclear; “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 Government should now commit to this technology – and scale up investment in offshore wind so that it becomes the backbone of British energy.”

I don’t think even the most pro-nuclear power campaigner can say that these figures are good news for their industry. Hinkley, still not built will now receive subsidies for the next 35 years at least 60% more costly than offshore wind.

New nuclear power plants in Suffolk and Wales are expected to be less than Hinkley but even then it is highly unlikely to be less than £80 per MWh, still much more expensive than the most recent offshore wind figures.

Wind farms are also much cheaper to build than nuclear plants and can be developed in stages. They are also constructed much quicker with UK wind farms boasting an excellent record of on time completion. Yes, there is intermittency but as alluded to above, new storage solutions added to smart grid technologies are expected to negate these issues in the near future.

Wind is proving to be an inexpensive modern viable energy option while nuclear trails somewhere far behind. With the government due to publish a major review on the cost of energy next month our hope is the wind is very much on their expansion agenda whilst at the same time we see an end of new nuclear power plants.

We believe that clean inexpensive renewable energy is the best option for everyone, economically and environmentally it makes sense.

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