Offshore wind slashes UK cost reduction goals ... now cheaper than new gas

Offshore wind power
CC BY 2.0 Flickr

Costs are about half of what they were just two years ago.

When a Dutch offshore wind project shattered cost reduction goals last year, we warned that it could be an outlier, but that outlier now has company. Business Green reports that the latest round of offshore wind contract auctions in the UK has hitting record prices as low as £57.50 per MWh—with a mean average strike price of £66.13. (The current conversion rate of the British pound is around US $1.30.)

To put this into perspective, average strike price back in 2015 (yes, that's two years ago) was £117 per MWh, and the industry itself had set a target of getting below £100 by 2020.

This is very big news. Here's how Emma Pinchbeck, executive director of RenewableUK, described the significance:

Of course, the potential for subsidy-free wind energy brings with it its own challenges—most notably emboldening the calls of those would prefer government didn't provide subsidy to low emission energy.

Here, there are two things to remember:

1) Any phase-out of subsidies will need to be gradual and predictable, and take place over time, allowing the industry the space it needs to become increasingly independent without pulling the rug out from under it.

2) Any discussion of subsidy reductions should also include this under-discussed fact—that fossil fuels are, by far, the most subsidized of all forms of energy. A "level playing field" requires rectifying that fact.

But still, today is a very, very good day for those of us who believe that renewables are the future. Maybe offshore wind can now take off in the US too.

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