A peer review commissioned by the UK Department for Energy Security and Net Zero has recommended lower cost estimates for offshore wind projects than those previously reported. The review assessed offshore wind generation cost data prepared by Arup in 2024, which was based on a survey of developers covering cost levels and technical assumptions.
The peer review was carried out by Grant Thornton UK and BVG Associates. It concluded that Arup’s overall approach was suitable, but identified potential bias in the survey results. The reviewers noted a limited number of responses and an over-representation of projects in deeper water and at greater distances from shore compared with the typical UK offshore wind project pipeline.
The review recommends reductions across several cost categories, expressed in 2023 pounds per kilowatt. Development costs in the medium scenario are revised down from £216 per kilowatt to £162 per kilowatt, and in the high scenario from £308 per kilowatt to £231 per kilowatt. Capital costs are also reduced, with the medium scenario falling from £2,823 per kilowatt to £2,540 per kilowatt and the low scenario from £2,415 per kilowatt to £2,174 per kilowatt. Infrastructure costs are revised down to £750 per kilowatt in the medium scenario and £561 per kilowatt in the low scenario.
In contrast, the review recommends higher decommissioning cost estimates across all scenarios. The reviewers argue that updated filtering should be applied to exclude outdated pre-2023 data so that estimates better reflect current market conditions.
The review also challenges Arup’s assumptions on future cost trends. For capital costs over a 20-year period, the recommended medium scenario assumes a 17 percent reduction, compared with a seven percent reduction in the original analysis.
Project timelines are shortened in the revised assumptions. Construction periods in the medium scenario are reduced from 4.6 years to three years, and in the low scenario from four years to two years. Operating lifetimes are also adjusted downwards, from 35 years to 30 years in the medium scenario and to 28 years in the low scenario.
According to the review, costs for operations, maintenance, servicing and insurance do not require adjustment, while network connection charges are considered to be within an acceptable range. The reviewers highlight that some cost categories were based on as few as three to eight data points, adding uncertainty to the results. Around half of the surveyed projects were located in water depths of 60 metres or more and required high-voltage direct current transmission, conditions that are less common across the wider UK offshore wind pipeline.
