UK renewables are now fully cost-competitive with fossil sources

The offshore wind auction produced a price of £57.50 per megawatt hour for two projects. The first phases of Hornsea2 and Moray offshore wind farms will be completed before April 2023 and will receive this guaranteed return.

In November 2016, the UK government produced an assessment of future electricity generating costs. Its central estimate of the likely price needed to attract developers to build offshore wind for projects completing in 2025 was £100. In other words, today’s announcement (11th September 2017) shows that offshore wind costs in five years’ time are not far off half what the government projected for 2025.

The 2016 official projections updated figures from 2013. In the earlier 2013 assessment, the cost of offshore wind installations in 2030 was put at £120, over twice the realised price for 2023.

Where does offshore wind now stand in comparison to other generating technologies? In the 2016 projections, the government suggested the following estimates for 2025. Figures are per megawatt hour.


Gas £82, including assumed carbon cost

Gas £53, without any carbon cost


PV £63

Onshore wind £61


Auction result for offshore wind, 2023, £57.50.


These numbers show that gas is projected still to be slightly cheaper - if carbon pollution costs are ignored - in 2025. But the differences between gas and renewables are, at most, £10 per megawatt hour. And most people in the industry now say that onshore wind and PV costs in 2025 will actually be substantially lower than the figures offered by BEIS in November 2016.


In addition, the assumed costs of power production from gas are flattered by a highly optimistic forecast of the percentage of time that a new power station will be actively producing electricity. The government estimates a CCGT plant will work 85% of the hours of a year. As more and more wind comes onto the British grid, this assumption will look increasingly wrong. A more realistic figure would push up the effective price of power produced by gas because the capital costs will be spread over a smaller total output.


Today’s wind auction shows that the main sources of renewable electricity (wind and solar) are now fully cost competitive will all types of fossil fuel power and require no subsidy. Commentators still saying that renewables are ‘expensive’ need to be corrected.