Nuclear power is too expensive. That is the implicit conclusion of the UK government, which has issued a consultation document on possible ways of reducing the electricity price. Around the same time the nuclear consultation document was published, the UK government announced the results of the latest allocation round for contracts for difference (CfD). This covered offshore wind and “remote island” wind. The results showed a dramatic fall in offshore-wind prices since the last CfD round: they fell to €52.5/MWh for projects to be commissioned in 2023/24 and €55/MWh for those coming online in 2024/25. The chart below shows the dramatic fall in prices since the first allocation round in 2015, when prices for offshore wind were close to €200/MWh. Prices fell sharply in the second round in 2017, and the latest prices show a further fall.Onshore wind has not been eligible since the first round, but the downward trend in onshore prices has continued, based on the $19.9/MWh (€18.2/MWh) price for Saudi Arabia’s 400MW Dumat Al Jandal wind farm. These low prices are likely to be due to a combination of lower wind turbine prices, improved and more efficient methods of working offshore and increased investor confidence — leading to lower required rates of return. Although UK CfD contracts run for 15 years, developers are less constrained by these, now that wind prices are below the current wholesale electricity prices.
Wind Power Monthly 31st Oct 2019 read more »