Cost of Onshore Wind Energy Development Now Competitive with Gas in the UK

If the UK wants to control energy prices for businesses, then the government should start encouraging onshore wind farm construction, a recent study commissioned by ScottishPower Renewables concluded. Engineering consulting firm Arup discovered that wind technology has dropped so much in cost that developers could build onshore wind farms for the same amount as new gas power stations, the Guardian reported.

Onshore wind energy technology is easy to deliver and now “phenomenally competitive” on price for businesses across the UK, ScottishPower CEO Keith Anderson told the Guardian. The Arup study recommends a $65 to $72 per megawatt-hour price cap for onshore wind projects to encourage cost-effective development. “You put these projects in the right place, you will get the correct level of resource out of them to keep the costs down,” he said.

In 2015, the UK government announced an end to subsidies for onshore wind farms starting in April 2016, a year earlier than had previously been agreed upon. New planning hurdles were also imposed, the Guardian pointed out. Altogether the move amounted to a ban on onshore wind power development.

“Onshore wind is the lowest cost, low carbon generation technology which, in suitable locations, can be deployed at scale,” the Arup report says. “Due to the capital intensive nature of onshore wind, combined with wholesale electricity market exposure, the investment case for onshore wind technology is unfavorable without a form of revenue stabilization to mitigate market risk.”

If onshore wind were to be considered for government subsidies again, the cost could be as low as $61 per megawatt-hour, including system costs, the Arup report concluded. For comparison, new gas power plants cost nearly $68 per megawatt-hour. Renewed support from the government could potentially make the wind farms more common and drive down energy prices for businesses. The government should reconsider its position preventing onshore wind from being built even where there is local support for the project, shadow energy minister Alan Whitehead told Energydesk.

This summer the UK government is undertaking an analysis of energy costs, including how aspects of the energy industry like smart meters and electric cars influence the cost of electricity. A report of the review is due out this October and will likely inform the government’s long-term approach to power generation, according to the Guardian.

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