Offshore wind prices tumble in record-breaking auction results – cheaper than nuclear and gas

The Department for Business, Energy and Industrial Strategy has announced that 3 offshore wind projects were successful, as they put in the lowest bids for Contracts for Difference (CfDs).  The winning projects are DONG Energy’s Hornsea 2 off the coast of Yorkshire, Innogy and Statkraft’s Triton Knoll off the coast of Lincolnshire, and EDPR and ENGIE’s Moray off the northeast coast of Scotland. The new wind farms, with a total capacity of 3,196 megawatts, will power the equivalent of more than 3.3 million homes.  

The cost of offshore wind has plummeted since the last competitive auction results were announced in February 2015, with the new prices on average 47% lower than they were just over two and half years ago. The offshore wind prices announced today are cheaper than the cost of the 35-year contracts for new nuclear power of £92.50 per megawatt hour, and cheaper than the levelised cost of gas, according to figures from the Department of Business, Energy and Industrial Strategy.   

Hornsea 2 and Moray will begin generating in 2022/23 at £57.50 per megawatt hour, and Triton Knoll in 2021/22 at £74.75/MWh, with prices guaranteed for 15 years of an expected project life of 25 years.

Welcoming this morning’s results, RenewableUK’s Chief Executive Hugh McNeal said: “We knew today’s results would be impressive, but these are astounding. Record-breaking cost reductions like the ones achieved by offshore wind are unprecedented for large energy infrastructure. Offshore wind developers have focused relentlessly on innovation, and the sector is investing £17.5bn into the UK over the next 4 years whilst saving our consumers money.

Today’s results are further proof that innovation in the offshore wind industry will bring economic growth for the UK on an industrial scale. The UK needs to establish new trading opportunities as we leave the European Union, and the UK’s offshore wind sector is a world leader in a global renewable energy market currently worth $290 billion a year.

“Today’s results mean that both onshore and offshore wind are cheaper than gas and nuclear. But this young, ambitious industry can go even further. The Government can help us by continuing to hold fiercely competitive auctions for future projects, as it has promised, and by putting offshore wind at the heart of its upcoming Industrial Strategy.

“Congratulations to the successful bidders: DONG Energy for Hornsea 2, Innogy and Statkraft for Triton Knoll and EDPR for Moray. These projects are the powerhouses of the future.

“It’s great to see these excellent results for offshore wind. It’s important that innovative renewable technologies, including wave energy and tidal energy projects also have a route to market, so different mechanisms are needed to ensure these cutting-edge technologies can develop. Tidal energy projects are already showing cost reductions and with the right encouragement can undergo the same sort of journey as offshore wind. Onshore wind is the cheapest from of new power, so it deserves an opportunity to compete too”.