New windfarms will not cost billpayers after subsidies hit record low
- Sep 20, 2019 1:35 pm GMT
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New renewable energy projects will be built at no extra cost for millions of British energy bill payers after record low state-backed subsidies fell below the market price the first time.
The results of a government subsidy auction have revealed that the cost of supporting offshore wind turbines has tumbled by almost a third in two years to record lows of less than £40 per megawatt hour (MWh).
The guaranteed price for wind power is so low that the cost of supporting the new generation of offshore windfarms will not add any additional costs on to energy bills.
The prime minister, Boris Johnson, said: “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.”
New subsidy contracts will be handed to energy giants – including Norway’s state-owned energy giant Equinor – for four new windfarms on remote islands, and another six offshore windfarms off the coasts of England and Scotland. The projects are expected to start powering UK homes within the next four years.
Most of the projects will receive as little as £39.65 for every megawatt hour of electricity they produce. The most expensive projects to win a subsidy contract will cost only slightly more, at £41.61/MWh.
Hugh McNeal, the chief executive of RenewableUK, said the results marked “a new era of cheap power, as the cost of offshore wind is now lower than the expected market price for power. Reaching that ‘zero-subsidy’ level is made possible by the certainty these long-term contracts provide.”
Offshore wind has plummeted below the cost of fossil fuels in a little over half a decade. The earliest offshore windfarms in the UK received contracts worth around £120/MWh in 2015.
Kwasi Kwarteng, the energy and clean growth minister said: “The support we’re announcing today will mean that over 7m 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.”
The latest record-breaking auction for offshore wind subsidies comes two years after two windfarms – the Hornsea 2 project off the Yorkshire coast and the Moray offshore windfarm in Scotland – secured a guaranteed price for their electricity of £57.50/MWh through a similar auction.
The sums were nearly half the £92.50/MWh awarded the year before to Britain’s first new nuclear power site in a generation, Hinkley Point C.
The plummeting cost of offshore wind is attracting more interest from major energy companies, which hope to profit from the offshore wind boom.
Earlier this week the Crown Estate opened what is expected to be its most competitive leasing round for new seabed licences to host the next generation of wind projects.