The costs of electricity generated by offshore wind in the UK will drop substantially over the next seven years, according to an industry-led task force.
A report out yesterday from the Offshore Wind Cost Reduction Task Force shows how key actions could drive costs down 30% to £100 per MWh by 2020.
The 29 recommended actions range from more efficient contracting to the concept of ‘alliancing’ - boosting collaboration all the way along the supply chain, which has been used successfully in the North Sea oil and gas industry to reduce risk and drive down costs.
Going forwards, the task force recommends the establishment of a more robust domestic supply chain and the encouragement of more competition in key areas to bring further savings.
The conclusions of the task force build on findings from The Crown Estate, which manages the UK’s coastal waters, that also conclude that £100 per MWh is achievable within the next seven years.
It currently costs around £140/MWh to generate electricity by offshore wind but reducing costs could save over £3 billion a year and unlock up to 18 GW of clean energy by 2020.
The improvement would take offshore wind a step closer to being fully competitive with other forms of generation.
“To ensure that the UK’s world-leading offshore wind sector expands rapidly over this decade and fulfills its massive potential within the UK's energy mix, it is vital that costs are reduced,” says chair of the task force, Andrew Jamieson, who is also director of policy and innovation at ScottishPower Renewables and chair of RenewableUK. “I am confident that we can achieve our cost saving goal and create huge economic opportunities for the UK in both the domestic and international energy markets… but it is crucial that we all begin work immediately.”
The report has been welcomed by the government, which the task force says needs to work closely with industry to overcome barriers.
“This report shows that substantial cost savings can be achieved if action is taken and I welcome this valuable work,” commented Energy Minister Charles Hendry. “I look forward to working closely with industry to take this forward further and deliver these ambitious targets.”
The Carbon Trust concurs that the rapid introduction of cutting-edge technologies across the industry could cut costs.
“Through the industry adopting a combination of radical innovations in foundations, electrical systems, turbines and the layout and access to wind farms off our coasts we are confident that 25% reductions in the cost of the technology can be achieved by 2020,” says Phil de Villiers, head of offshore wind at the organisation.
But he warns that the rollout of new technologies won’t happen on its own and is currently being help back by a lack of demonstration sites where new concepts can be tried out.
Rob Hastings of The Crown Estate also warns that there is no silver bullet to reduce the costs of offshore wind and calls on all parts of the sector to play their part.
For further information:
UK economy will benefit from offshore wind, says report (13-Jun)
Global renewables investment soars to $257 billion (11-Jun)
European wind industry to boost growth and jobs, says EWEA (17-Apr)
Co-ordinating offshore wind development could save £3.5 billion (2-Mar)
14 June 2012