United Kingdom

United Kingdom

The UK offshore wind target in context

UK: Although the headline generation cost aim for offshore wind in 2020 is £100/MWh (EUR125/MWh), a range of achievable cost reductions are cited in the Crown Estate's report Offshore Wind Cost Reduction - Pathways Study. These depend on the rate at which offshore wind develops, the characteristics of particular sites and the regulatory regime affecting capital repayment costs.

The study looked at four possible sites, three 40 kilometres from shore with wind speeds of 9-9.7m/s and water depths of 25-45 metres, and one site 125 kilometres from shore with a wind speed of 10m/s. Although the sites with the highest wind speeds were potentially the most attractive, their generation costs come with a greater range of uncertainty. The range of costs runs from around £85/MWh to £130/MWh.

The report points out that many factors contribute to the reduction in costs from the current figure of around £140/MWh, but a move towards larger turbines is key, reducing installation costs by up to 30% and increasing energy yield as larger turbines experience higher winds and fewer wind turbines mean lower wake losses.

Looking at the report's range of costs, offshore wind compares well with every other generation technology, with the exception of gas-fired generation without carbon capture and storage (CCS), as shown below.

Nuclear is possibly seen as offshore wind's main competitor, but the most recent estimates suggest nuclear is likely to cost £90-135/MWh - similar to the range for offshore wind. New coal plants without carbon capture and storage are likely to cost £86-95/MWh and gas in the £70-72/MWh range, but these sources are expected to be discouraged.

Worldwide up to $40 billion has been committed by governments to support CCS projects and generation cost estimates for the UK suggest that both coal and gas may be able to generate electricity at a cost that is around £100/MWh, although some uncertainty surrounds this figure.

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