At a press conference earlier this week, energy minister Charles Hendry launched a new report by the industry led Offshore Wind Cost Reduction Task Force that shows that the UK is on course to reduce the cost of electricity from offshore wind substantially over the next seven years.
The report builds on evidence in a study by The Crown Estate to show how reductions can be achieved, setting out specific actions to drive costs down by over 30%.
This huge cut will see the cost of delivering 18GW of electricity from offshore wind farms (around 20% of the UK’s total electricity demand) drop from £140/MWh today to £100/MWh by 2020, saving over £3bn per year.
In achieving this, offshore wind will take another major step towards being fully competitive with other forms of energy generation which will make up the UK’s energy mix.
The Offshore Wind Cost Reduction Task Force report lays out 28 specific recommendations on how the industry can reduce the cost of generation, covering supply chain, innovation, contracting strategies, planning and consenting, finance and grid.
Within these the Task Force has highlighted that more efficient contracting and the concept of ‘alliancing’, used successfully by the North Sea oil and gas industry to reduce risk and bring down costs, have the potential to be transformative in lowering cost and improving working practices.
In addition the Task Force has identified the development of a more robust domestic supply chain and increased competition as key areas for focus. The Task Force report also calls for industry and government to work more closely together to address barriers as they arise. A new Programme Board is to be established to do this.
Hendry commented, “Offshore wind will be a vital part of a diverse and secure low carbon energy mix in the decades ahead. But, we are clear that costs must come down.
“I am encouraged that this report shows that substantial cost savings can be achieved if action is taken and I welcome this valuable work. I look forward to working closely with industry to take this forward further and deliver these ambitious targets.”