Price of offshore wind power falls to cheapest ever level in UK
The price of offshore wind power in the UK has fallen to an all-time low, which could ease the pressure on future household energy bills.
Following the biggest ever UK renewables auction, the government said on Thursday the contract price for windfarms was nearly 6% lower than the previous auction, despite the rising cost of materials to build windfarms.
A string of new contracts should add about 7 gigawatts of clean power capacity to Britain’s turbine fleet by 2026. The government hopes to have 50GW by 2030 and has embarked on a push to expand Britain’s renewables industry in the face of rocketing fossil fuel prices.
Russia’s invasion of Ukraine has exacerbated an already volatile oil and gas market and left countries scrambling to shore up their energy supplies.
UK ministers have been forced to ask coal-fired power plants to continue their operations through the winter for fear of blackouts caused by energy shortages.
However, renewable energy including wind power is seen as central to Britain’s goal of hitting net zero carbon by 2050.
Offshore windfarm operators will sell power for as little as £37.35 per megawatt hour, 5.8% below the lowest bid in the most recent auction in 2019.
The “contracts for difference” guarantee wind-power companies fixed prices to sell electricity for the following 15 years. If the market price falls below the contract price, the government subsidises the difference. If the market is higher, the companies pay money back to the government.
Since wholesale energy prices began to rocket last year, windfarms have begun paying back money to the government.
The easing of an effective moratorium on new onshore windfarms – which was imposed in 2015 – meant onshore wind and solar energy were both included in
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