A study has found that the British Government could deliver 1GW of new
onshore wind capacity – enough to meet the equivalent annual demand of
600,000 homes – at no additional cost to consumers over and above the
long-term wholesale price of power.
However, delivery is dependent on mature renewables being able to bid in
auctions for long-term contracts for clean electricity, such as those
offered to offshore wind and the new nuclear facility at Hinkley Point.
The report by Baringa Partners is based on the latest evidence on the costs
of onshore wind and other established renewable technologies such as
large-scale solar power.
It concludes that an auction would result in further reductions in the cost
of onshore wind power, which the UK Government already believes to be on
track to be the lowest cost form of electricity generation in the UK.
The auction is expected to clear at £49.40 per MWh, meaning that successful
onshore wind projects would receive limited ‘top-up’ payments over and
above the wholesale price of power in the first years of their operation,
but would then pay back a greater amount to the public purse over the
remainder of their contract as the wholesale power price increases.
The capacity delivered through the auction – most of which is expected be
in Scotland – would result in more than £1 billion of private sector
investment in clean energy generation across the country, and would
displace some eight million tonnes of CO2 during their lifetime.
The report highlights the falling costs of onshore wind internationally as
a result of decreasing turbine prices and the use of auctions to ensure
competition.
Peter Sherry, Senior Manager at Baringa Partners and lead author of the
report, said: “The dramatic reductions observed globally in both renewable
and storage technology costs represent a game-changer for the sector and
can help move us a step closer to solving the ‘trilemma’ of how to deliver
reliable and clean energy at an affordable cost for consumers.
“As an island system with exceptional onshore wind resources, Britain is
well-placed to play a leading role in this transition.”
“Even with no direct subsidy required, the government can still play an
important role in offering a low-risk route to market for new onshore wind
via the CfD mechanism.”
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