Report: UK Offshore Wind On Track to Hit GBP 100/MWh Target by 2020

A report published today has provided strong evidence that the cost of energy from offshore wind in UK continued to fall through 2015 and remains on track to deliver the target of GBP 100/MWh by 2020.

Of the 13 cost reduction indicators, all but one are ahead or on target with the milestone set for 2015, the second annual Cost Reduction Monitoring Framework (CRMF) report shows. The only measure that is behind target is growth and scale.

Findings show that industry has already adopted innovations that were not previously expected to significantly drive cost reduction until 2017, particularly in the areas of turbine design and project maintenance.

The report, delivered by the Offshore Renewable Energy Catapult on behalf of the Offshore Wind Programme Board, also assessed the degree of confidence that the industry has in delivering further cost savings. It found high confidence of delivery in eight of the indicators, with medium confidence in a further three, to achieve the milestone of GBP 100/MWh in 2020. Such confidence has brought a commitment from UK government to work with industry on agreeing a new, ambitious cost reduction target for the 2020s.

The report identifies forthcoming announcements on timing and scale of future Contracts for Difference (CfD) auctions and long term capacity requirements as key enablers of further cost reduction.

“The UK offshore wind industry continues to go from strength to strength and I’m delighted to see further evidence that costs are continuing to come down. Reductions in cost will mean better value for hard working bill payers, and are essential if this industry is to thrive,” UK Energy Minister, Andrea Leadsom said.

The report shows that investment in turbine technology has delivered significant cost benefits, but that further reduction will need to come from the innovations in ‘balance of plant’, such as foundations, cables and substations.

Investment in research and development and manufacturing industrialisation to deliver such improvements, the report warns, will only come with greater visibility of future rates of deployment and market size as the UK government sets out details of contracts for new offshore wind farms.

“We have continued to see excellent progress in reducing the cost of clean energy from offshore wind. The industry is fast-tracking adoption of new innovation in turbine design and in project operations, putting us ahead of the curve in efforts to bring down the cost of offshore wind. We are very confident that we cannot only reach our GBP 100/MWh milestone, but go beyond this to become fully cost competitive with other generation technologies,” Benj Sykes, industry co-chair of the Offshore Wind Industry Council, said.

“We welcome the UK Government’s continued strong support for the offshore wind sector, recognising it as a major contributor to the nation’s future energy mix. The report shows that further clarity on the timing and volume of future Contract for Difference auctions, and the longer term capacity requirements out to 2030 and beyond, is essential for the industry to galvanise the activity that will deliver further innovation and cost reductions,” Sykes said.

The report is released at the same time as the UK Parliament reviews the 5th Carbon Budget of the Committee on Climate Change, which projects that offshore wind costs will be below new nuclear and new gas plant by 2025.

Jonathan Cole, Chair of the Offshore Wind Programme Board, said: “Offshore wind is delivering jobs and economic benefit to the UK right now. This report shows that consumers and Government can be confident that the cost of offshore wind will continue to reduce and that offshore wind is the ideal way to produce the large quantities of clean, reliable energy that the UK needs.”