Onshore wind costs set to reduce dramatically making it ‘subsidy free’ by 2020

Aug 28, 2015

  • Policy Exchange says new low cost onshore wind projects should be allowed to proceed as part of the government’s drive to decarbonise at least cost
  • Report says cost of onshore wind estimated to fall to £60/MWh by 2020 with the vast majority of new projects located in Scotland

Onshore wind is the most cost effective and scaleable low carbon technology in the UK and should be allowed to continue, albeit with subsidies phased out, if the government wants to decarbonise at least cost to the consumer.

A new report, Powering Up: The future of onshore wind in the UK, by leading think tank Policy Exchange estimates that the cost of onshore wind could continue to fall from £85/MWh to approximately £60/MWh by 2020 as a result of using larger turbines in high wind speed areas of the country – predominantly Scotland. This would put the cost of onshore wind in the same league as a new gas plant and significantly cheaper than offshore wind, biomass, or even nuclear.

The paper says that in order to achieve these cost reductions, new onshore wind projects should be allowed to continue to take part in the government’s Contract for Difference (CfD) auction mechanism. It highlights that, in reality, this would signal an end to onshore wind development in England. In the first CfD round, 10 of the 15 projects were located in Scotland, accounting for 73% of the total capacity, with the remainder in Wales (24%), and England (3%). Support for onshore wind is significantly higher in Scotland (71% of the public are in support) than in England (support drops to 61%).

The paper includes a number of proposals including:

  • Fast-tracking the Energy Bill to minimise uncertainty for onshore wind developers
  • Allowing new and repowered onshore wind projects to participate in renewables CfD auctions
  • Capping and reducing the amount paid to new and repowered onshore wind projects, such that they effectively become ‘subsidy free’ by 2020
  • Increasing community ownership and community benefits from onshore wind

Richard Howard, author of the report, said:

“A complete ban on new onshore wind projects is likely to lead to a higher cost to consumers. Onshore wind is already the cheapest form of low carbon power generation in the UK. It has the potential to come down further in price but only if the government allows it to continue to compete in subsidy auctions.

“In reality, new onshore wind projects will be predominantly located in Scotland where there is greater public support than the rest of the UK. Scotland has higher wind speeds and a sparser population than the rest of the UK, making it more conducive to onshore wind development.”

ENDS

For further information or a full copy of the report contact Nick Faith on 07960 996 233

Author

Richard Howard

Richard Howard
Director of Development & Head of Environment & Energy Read Full Bio

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