The next wave of offshore windfarms will produce greener electricity for no extra cost to UK consumers.
This has been made possible by record lows in subsidy deals that have fallen far below market price for the very first time.
Within the next four years, millions of British homes will be powered by new offshore wind projects that are under ‘zero subsidy’ support contracts, following a government subsidy auction that has broken previous records.
The cost of offshore wind has fallen to about £40 per megawatt hour as a result of the auction. This price drop of around 33% makes wind power cheaper than the price of wholesale electricity.
Boris Johnson has welcomed the developments, saying: “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.”
Norway’s state-owned Equinor (formerly Statoil) is one of the companies that will be given one of the new subsidy contracts. These contracts will see the creation of ten new windfarms across the UK: four on remote islands, and six off the coasts of Scotland and England.
Equinor, along with SSE, will build the largest offshore wind project in the North Sea at Dogger Bank. The aim is to build three interconnected offshore wind farms that make up an ‘industrial wind hub’. The network will have a total capacity of around 3.5 gigawatts, which is enough to power 4.5 million UK homes.
Chief executive of Equinor, Eldar Sætre, said the project would be able to deliver low-cost energy due to the “excellent wind speeds, shallow waters and scale”.
“A full-scale development of Dogger Bank will constitute an industrial wind hub in the heart of the North Sea, playing a major role in the UK’s ambitions for offshore wind and supporting the net zero ambition.”
Chief executive of RenewableUK, Hugh McNeal, said it was “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.”
The energy and clean growth minister, Kwasi Kwarteng, 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 cost of offshore wind power has fallen well below the cost of fossil fuels in the last 5 years. Contracts in 2015 were worth about £120/MWh, whereas in the recent auction the most expensive subsidy cost just £41.61/MWh, with most receiving as little as £39.65/MWh.
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