UK wind cheapest ever

 From The Guardian

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. [In just the last year, UK consumer prices have risen 7%, so this is a material decline in real prices]

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 [US$44.82, which is *very* cheap], 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 an auction for the first time in seven years. Onshore wind is now about 45% of the price secured in the auction in 2015. [A real fall of 60% after allowinf for inflation]

Among the winners from the auction were the Danish power company Ørsted, Scottish Power and Sweden’s Vattenfall.

Ørsted landed the contract for the world’s biggest offshore wind project, at Hornsea Three, 100 miles (160km) off the east Yorkshire coast. It is hoped the project will produce enough renewable electricity to power 3.2m UK homes.

Scottish Power secured a contract for the East Anglia Three offshore wind project, five onshore wind projects and 10 solar sites. Vattenfall agreed terms for the Norfolk Boreas offshore windfarm, which it said would meet the needs of about 1.5m homes.

It is hoped the projects will help to eventually bring down bills for consumers, which are expected to top £2,800 from October.

The business secretary, Kwasi Kwarteng, said: “Eye-watering gas prices are hitting consumers across Europe. The more cheap, clean power we generate within our own borders, the better protected we will be from volatile gas prices that are pushing up bills.”

Ørsted turbines at the Hornsea One field. The Danish company has won the contract for the world’s biggest offshore wind project at Hornsea Three. Photograph: Ørsted/EPA

Offshore wind used to be much more expensive than onshore wind.  But we've moved fast down the learning curve.  Offshore wind is prized because they wind blows more and more often offshore than onshore, which brings wind power closer to baseload.