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The Actuary The magazine of the Institute & Faculty of Actuaries

Offshore wind to become cheapest mass-produced clean energy source

The cost of energy from offshore wind has fallen by 32% since 2012, hitting the UK government’s price reduction targets four years ahead of schedule, according to the Offshore Renewable Energy (ORE) Catapult.

Offshore wind 'a big success story' ©Shutterstock
Offshore wind 'a big success story' ©Shutterstock

Their third annual Cost Reduction Monitoring Framework report shows that wind farms hit cost targets of £100 per megawatt hour (MWh) last year, which were not expected to be achieved until 2020.

There is now increased confidence of continued rapid cost reduction for wind power, to below levels set by any other large-scale, low-carbon energy source, as the industry now focuses on growth and job creation.

Offshore Wind Industry Council co-chair, Benj Sykes, said: “Offshore wind is 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 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.”

The cost of energy from offshore wind has fallen sharply to £97MWh, compared to £142MWh in 2010/11 according to the report.

This has been achieved through the adoption of larger turbines, increased competition and a lower cost of capital, with supply chains now delivering significant growth for UK manufacturing.

The report also identifies further increases for UK jobs and ways for a more coordinated approach to industrial strategy.

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.

“This growing industry will be an important part of the government’s new industrial strategy, and will be underpinned by £730m of annual support for renewable energy over the course of this 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.”