Offshore wind farms power cost drops by 32% in five years, says report
The cost of power from offshore wind farms has fallen by a third in five years, a report has shown.
Energy prices for offshore wind have fallen 32% since 2012, and are now below the target agreed by Government and industry of £100 per megawatt hour (MWh), four years ahead of 2020 date set to achieve the goal.
The industry said it was "well on the way" to being cost-competitive with other sources of power generation.
Schemes making final investment decisions in 2015/2016 were doing so with a cost of energy of £97/MWh, compared with £142/MWh five years earlier, the third annual cost reduction monitoring framework (CRMF) report shows.
The fall in price is down to the adoption of larger turbines, increased competition and lower cost of capital, according to the report from the Offshore Renewable Energy (ORE) Catapult on behalf of the Offshore Wind Programme Board (OWPB).
Installing fewer, larger turbines reduces operational and maintenance costs, with the newest 8MW units providing enough electricity to meet a household's power needs for more than a day from just one rotation of the blades, the industry says.
UK energy minister Jesse Norman said: "The UK's leadership in offshore wind clearly demonstrates that it is an attractive destination for renewable energy investment."
He said the industry would be an important part of the Government's new industrial strategy outlined on Monday, and would be underpinned by £730 million of annual support for renewables over the course of the parliament.
"Thanks to the efforts of developers, the UK's vigorous supply chain and support from Government, renewables costs are continuing to fall.
"Offshore wind will continue to help the UK to meet its climate change commitments, as well as delivering jobs and growth across the country," he said.
Co-chairman of the Offshore Wind Industry Council (OWIC) Benj Sykes said offshore wind was a "big success story at the very heart of the UK's industrial strategy".
"The industry is cutting costs much faster than predicted, while creating thousands of jobs and stimulating investment nationwide. But this is a story that is just beginning.
"We remain committed to delivering further significant cost reduction, while working in partnership with Government to put in place a sector deal and build a sustainable industry that will benefit the UK for decades to come.
"Our industry's goal is to be cost-competitive with other generation sources, and this new data shows that ambition is realistic and that we are well on the way to achieving it."
Industry body RenewableUK's deputy chief executive, Maf Smith, said: "This spectacular drop in offshore wind costs demonstrates the strong commitment by the entire industry to delivering value for money for consumers.
"We're seeing the kind of tenacious cost reduction and technical innovations in offshore wind which are normally associated with things like consumer electronics - TVs and phones.
"The interesting thing here is that this is now happening with multibillion-pound offshore energy infrastructure projects."
Further cost reductions would be achieved by sourcing more components and services in the UK, developing a supply chain which already employs thousands of people.
" This is just the start of an industry which is set to become a mainstay British employer," he said.