BVG Associates has published the first quantitative study of the effect of government policy on cost of energy from offshore wind during the 2020s. The study was commissioned by the Committee on Climate Change (CCC). The study considers the effect of a range of policy drivers in the context of a predominantly pan-European market.
It shows that simply by giving better visibility and confidence of future levels of deployment to the offshore wind industry, the Government could cut £1.9 billion in the 2020s from the cost to UK energy users of offshore wind projects built between 2021 and 2030, compared with the current approach. Visibility in the shorter-term means rolling clarity on the anticipated size of CfD auction pots. In the longer-term, visibility and confidence come from a stable policy environment based on a rational, framework for low-carbon energy that prioritises technologies offering the lowest cost solutions. Further, the study shows what could happen if the UK Government, along with others in the rest of Europe, decided to facilitate an accelerated programme of deployment. In this case, offshore wind would generate 35% more electricity in 2030, but at a cost increase to UK energy users, for offshore wind during 2020s, of only 4%, due to the increased pace of cost of energy reduction. It also shows that under a holistic combination of policy drivers, the cost of offshore wind energy could fall to around £80/MWh for projects first generating in 2030. By then, it will already be cost competitive with other new-build electricity generation technologies, including combined cycle gas turbines.