The UK will build its first subsidy-free offshore wind farms next decade, campaigners and businesses said this morning as Britain’s cheapest ever offshore wind energy was unveiled.
The country cemented its place as a global leader in offshore wind as one tender to provide the grid was quoted at £39.65 per megawatt hour (MWh).
The government said it had awarded twelve offshore licences in the most recent funding round. The projects will be able to power around 7m homes.
“Today’s CfD results indicate just how quickly the renewables industry has evolved to compete with conventional power. The strike prices are at a record low at a level that was unthinkable even a couple of years ago,” said Antony Skinner, at law firm Ashurst.
Government grants guarantee that generators of electricity will be paid a minimum price for their energy. Conversely, if the price goes above that level, the government takes its cut.
The £39.65 guarantee is below market rates, so will not need any subsidy.
It is also far below the £92.50 that EDF has been promised for the electricity it produces from nuclear plant Hinkley Point C when it comes online in 2025.
It makes offshore wind the second-cheapest source of new power generation, and is a 30 per cent drop from the last auction in 2017, the government said.
“Seizing the opportunities of clean energy not only helps to protect our planet, but will also back businesses and boost jobs across the UK,” said Prime Minister Boris Johnson.
Giles Dickson, the chief executive of industry body Wind Europe, said Britain has the best auction model and largest auction plans in Europe.
“Other European countries should take careful note as they finalise their offshore wind plans,” he said.
However others warned that the so-called contract for difference scheme benefits offshore wind at the expense of other renewables, which will be needed when the wind does not blow.
“The government must ensure a fair and inclusive route to market for all technologies,” said Frank Gordon from the Renewable Energy Association.