How cost of offshore wind can be cut by a third

A report launched by the offshore wind cost reduction taskforce – an industry group commissioned by the government – said a cut of this size will save the UK more than £3bn per year.

In achieving this, offshore wind will become more competitive against other forms of energy generation which will make up the UK’s energy mix, the report said.

The report lays out 28 specific recommendations on how the industry can reduce the cost of generation.

They include more efficient contracting and the concept of “alliancing”, a collaborative working method used successfully by the North Sea oil and gas industry to reduce risk and bring down costs. The taskforce has also identified the development of a more robust domestic supply chain and increased competition as key area for focus.

Building windfarms offshore is difficult and that makes the electricity they produce expensive. In 2009, per megawatt hour:
Offshore wind cost £149
Coal cost £102
Nuclear cost £97
Onshore wind £88
Gas fired power cost £80
(source: Mott MacDonald 2010)

The report also called for industry and government to work more closely together to address barriers as they arise, with a new board established to do this.

The taskforce was announced by the Department of Energy and Climate Change in July 2011. Its report builds on the Crown Estate’s analysis which establishes the areas in which these cost reductions are possible.

Electricity from offshore wind farms makes up around 20 per cent of the UK’s total electricity demand.

Andrew Jamieson, the taskforce chair, said reducing costs will help to protect consumers, reduce the industry’s requirement for financial support and deliver jobs and energy security for decades to come.

“I am confident that we can achieve our cost saving goal and create huge economic opportunities for the UK in both the domestic and international energy markets.”