Offshore wind costs tumble to new record lows

The cost of offshore wind has continued to tumble as the Government revealed the price for power from new schemes had fallen below £40 per megawatt hour of electricity.

Some 12 renewable energy projects, including offshore and remote island wind schemes, have secured contracts to provide enough power for more than seven million homes.

Prices for new offshore wind farms in the latest auction for the contracts – which guarantee a set price for power from renewable schemes – have fallen by 30% since the last auction in 2017, to as low as £39.65 per megawatt hour.

It means that for the first time, renewables are expected to come online below market prices and without an additional subsidy on bills, the Department for Business, Energy and Industrial Strategy said.

The successful projects include four Scottish island wind farm schemes and six offshore wind projects in the waters off Scotland and England, which are set to be delivered between 2023 and 2025 for between £39.65 and £41.61 per megawatt hour.

The price of offshore wind has fallen two-thirds since the first auctions for the contracts were held in 2015.

Prime Minister Boris Johnson said: “The UK is leading the way in the fight against climate change, and it’s great news that millions more homes will be powered by clean energy at record low prices.

“Seizing the opportunities of clean energy not only helps to protect our planet, but will also back businesses and boost jobs across the UK.”

Energy and clean growth minister Kwasi Kwarteng said: “Offshore wind is a British success story, with new projects at record low prices creating new opportunities for jobs and economic growth as we leave the EU.

“The support we’re announcing today will mean that over seven million more homes will be powered by renewable energy as we decarbonise our energy system – crucial as we continue on the road to net zero emissions by 2050.”

In total, the projects will deliver six gigawatts of power, enough to supply millions of homes, with offshore wind delivering the lion’s share, with 5.5 gigawatts.

Industry body RenewableUK said the offshore schemes would support 7,000 jobs and bring up to £12.8 billion of investment.

Its chief executive Hugh McNeal said: “Securing this record amount of new renewable energy capacity in this auction is the biggest single step that the UK has taken towards meeting our net zero emissions target.

“As these results show, offshore wind is the key technology for this country in tackling the climate emergency.

“Offshore wind will be the backbone of the UK’s clean, modern energy system and will supply at least a third of our power by 2030.”

He said coastal communities in places such as Grimsby, Hull, Teesside, Lowestoft, Great Yarmouth, the Isle of Wight and Aberdeen, which are hubs for the burgeoning industry, would benefit from the latest boost to offshore wind.

Lawrence Slade, chief executive of industry body Energy UK, said: “Today’s exceptionally low results are tremendously exciting, on a day of global climate action, and shows just what can be done right now.

“The cost of clean energy is continuing to fall, and the move to a low carbon future is being delivered at the lowest cost to consumers.

“This 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.”

Shadow business and energy secretary Rebecca Long Bailey said: “It is now clear that investing in wind power will not only save the environment, but can bring down bills too.

“Unfortunately, the Tories seem more interested in pushing dangerous fracking and maintaining our dependence on fossil fuels than the massive investment in renewables we will need to tackle the climate emergency.”