Britain’s offshore wind turbines are fast outgrowing potential reference points on London’s skyline. In 2000, for example, when the first machines were installed off Northumberland, their blades reached almost to the height of Big Ben. By this year, record-breaking turbines in Liverpool Bay stood taller than the Gherkin in the City. Today the government is expected to pave the way for the biggest yet, machines so tall that they could dwarf even the 50-storey tower of One Canada Square in Canary Wharf. And when it comes to the cost of power generation from the wind, bigger means better – or at the very least cheaper, as the government is expected to demonstrate this morning when it announces subsidies for new projects. As the turbines go up in scale, these subsidies are coming down. Offshore wind farm developers receive contracts guaranteeing them a fixed price for the power they will generate for 15 years, subsidised by consumers through their electricity bills. In 2014, ministers awarded guaranteed prices of up to £150 per megawatt-hour (MWh), more than three times today’s wholesale market price. A year later, when contracts were last awarded in Britain, companies were made to compete and prices fell below £120/MWh. Since then, prices have fallen drastically elsewhere in Europe (two German projects have even gone subsidy-free), and though the industry insists that the continental results are not directly comparable, Renewable UK, the trade body, is confidently forecasting that prices will plunge today, to be “significantly lower” than the £92.50/MWh awarded to the Hinkley Point nuclear plant. “I’ve got no doubt it’ll be below £80,” Keith Anderson, head of Scottish Power, which won a contract in 2015, said. “Whether it breaches £70 or not, we will see.” It’s a reduction that he argues is “faster than anyone could have imagined”. Government targets for costs in 2020 that looked “incredibly difficult to achieve” when set in 2011 were met last year, four years early. The push for bigger, more powerful turbines is central to that achievement, according to Matthew Wright, UK country chairman of Dong Energy, the world’s leading offshore wind developer. “It is a very significant part of the cost equation, because if you have an eight-megawatt machine versus a four-megawatt machine, you need half the number of turbines, half the number of foundations and you’ve got half the number machines to maintain.” The plunge in offshore wind costs raises tough questions for developers of new nuclear and tidal projects. If offshore wind comes in substantially cheaper than the £92.50 per megawatt hour for Hinkley Point C, it will set a new benchmark against which future projects must convince authorities that they offer value for money. It will also make it much harder for the backers of untested tidal lagoon technology, which is seeking in excess of £100/MWh, to show that these subsidies are worth piling on to household bills. Charles Hendry, the former energy minister who led a review of tidal lagoons, said: “There will be a temptation to say that we should forget about tidal lagoons, because the costs of offshore wind are much cheaper.” Both he and Tidal Lagoon Power, the developer, argue that is the wrong. They say that offshore wind should be seen as an example of how costs can be reduced. “The ingredients for wind’s success are crystal clear: vision, unwavering government support, an acceptance of higher start-up costs and a collaborative effort to reduce them as soon as possible,” a Tidal Lagoon Power spokesman said. “The UK tidal lagoon industry seeks permission to follow suit.” Keith Anderson, of Scottish Power, said that he doubted whether tidal and nuclear technologies that entailed “colossal infrastructure projects” could cut their costs in the same way. Tom Greatrex, chief executive of the Nuclear Industry Association, argued that Britain could not rely solely on offshore wind and would need “the full range of low-carbon technologies to provide reliable, secure and readily available power”.
Times 11th Sept 2017 read more »