Power from offshore wind within the UK will probably be cheaper than electrical energy from new nuclear energy for the primary time.
The price of subsidies for brand new offshore wind farms has halved for the reason that final 2015 public sale for clear power initiatives
Two corporations mentioned they had been keen to construct offshore wind farms for a assured worth of £57.50 per megawatt hour for 2022-23.
This compares with the brand new Hinkley Level C nuclear plant securing subsidies of £92.50 per megawatt hour.
Nuclear corporations mentioned the UK nonetheless wanted a mixture of low-carbon power, particularly for when wind energy was not out there.
The figures for offshore wind, from the Division for Enterprise, Power and Industrial Technique, had been revealed as the results of an public sale for subsidies, through which the bottom bidder wins.
Within the public sale in 2015, offshore wind farm initiatives received subsidies between £114 and £120 per megawatt hour.
Emma Pinchbeck, from the wind power commerce physique Renewable UK, instructed the BBC the most recent figures had been “actually astonishing”.
“We nonetheless suppose nuclear might be a part of the combination – however our trade has proven how you can drive prices down, and now they should do the identical.”
Greater generators, greater voltage cables and decrease price foundations, in addition to progress within the UK provide chain and the downturn within the oil and gasoline trade have all contributed to falling costs.
The most recent eight megawatt offshore generators stand nearly 200 metres excessive, taller than London’s Gherkin constructing. However Ms Pinchbeck mentioned the generators would double in measurement within the 2020s.
Nuclear ‘nonetheless wanted’
Nonetheless, the nuclear trade mentioned that as a result of wind energy is intermittent, nuclear power would nonetheless be wanted.
Tom Greatrex, chief government of the Nuclear Business Affiliation, mentioned: “It does not matter how low the value of offshore wind is. On final yr’s figures it solely produced electrical energy for 36% of the time.”
EDF, which is constructing the Hinkley Level C nuclear plant, mentioned the UK nonetheless wanted a “various, well-balanced” mixture of low-carbon power.
“New nuclear stays aggressive for shoppers who face additional prices in offering back-up energy when the wind does not blow or the solar does not shine,” the French agency mentioned.
“There are additionally prices of coping with extra electrical energy when there’s an excessive amount of wind or solar.”
EDF added that power from new nuclear crops would develop into cheaper because the market matures, as has occurred with offshore wind.
Eyes will probably be raised at this suggestion, as nuclear energy has already obtained subsidies for the reason that 1950s. However storage of surplus power from offshore wind continues to be a problem.
Onshore wind energy and photo voltaic power are already each cost-competitive with gasoline in some locations within the UK.
And the value of power subsidies for offshore wind has now halved in lower than three years.
Power analysts mentioned UK authorities coverage helped to decrease the prices by nurturing the fledgling trade, then incentivising it to develop – after which demanding corporations ought to bid in public sale for his or her subsidies.
Minister for Power and Business Richard Harrington mentioned: “We have positioned clear progress on the coronary heart of the Industrial Technique to unlock alternatives throughout the nation, whereas slicing carbon emissions.
“The offshore wind sector alone will make investments £17.5bn within the UK as much as 2021 and 1000’s of recent jobs in British companies will probably be created by the initiatives introduced as we speak.”
Michael Grubb, professor of power coverage at College School London, referred to as the fee discount “an enormous step ahead within the power revolution”.
“It exhibits that Britain’s largest renewable useful resource – and least politically problematic – is out there at cheap price.
“It’s going to be just like the North Sea oil and gasoline trade: it began off costly, then because the trade expanded, prices fell. We are able to anticipate offshore wind prices to fall extra, too,” he mentioned.
The subsidies, paid from a levy on shopper payments, will run for 15 years – in contrast to nuclear subsidies for Hinkley C which run for 35 years.
This provides to the fee benefit offshore wind has now established over new nuclear.
Prof Grubb estimated the brand new offshore wind farms would provide about 2% of UK electrical energy demand, with a internet price to shoppers of below £5 per yr.
Caroline Lucas, co-leader of the Inexperienced Get together, mentioned: “This large worth drop for offshore wind is a large enhance for the renewables trade and needs to be the nail within the coffin for brand new nuclear.
“The federal government’s timeless dedication to new nuclear dangers locking us into sky excessive costs for years to come back. Put merely, this information needs to be the demise knell for Hinkley C nuclear station.”
Together with three offshore wind farm initiatives, biomass and power from waste crops have secured subsidies for low-carbon power, with a complete of 11 profitable schemes within the newest public sale.
The £57.50 for brand new offshore wind energy is just not a real subsidy. It’s a “strike worth” – a assured worth to the producing agency for energy it provides.
When the wholesale market worth for electrical energy is beneath that worth, funds to the agency are made up with a levy on shoppers.
Nonetheless, when the wholesale worth is above the strike worth, the generator pays the distinction again. It’s a method of offering a sure return on funding for big power initiatives.
It’s inconceivable to foretell what the ultimate further price to shoppers will probably be as a result of it is determined by market situations, however it’s going to nearly actually be a fraction of the strike worth itself.
Specialists warn that so as to meet the UK’s long run local weather targets, further sources of low-carbon power will nonetheless be wanted.
Observe Roger on Twitter @rharrabin.