Britain in £1bn block on cheapest energy technology

Outdated policy is blocking development of the cheapest new electricity generation technology in Britain, a report finds, with knock-on impacts for consumer bills, climate change goals and British business.

Electricity from 1 gigawatt (GW) of new onshore wind farms would cost £30 million per year less than obtaining the same power from new offshore wind, the Energy and Climate Intelligence Unit finds, and £100 million less than from new nuclear or biomass plant. It is also cheaper than high-carbon gas generation.

Cumulatively, continuing the onshore wind ban could cost £1bn over 4-5 years relative to other technologies.

The report, Blown Away, comes as the government is preparing to publish a review of energy costs in pursuit of the ‘lowest energy costs in Europe’, and just after the government’s Clean Growth Strategy found that new low-carbon policies are needed to meet legally-binding climate change targets.

Commenting, Richard Black, director of the ECIU, said:

“The effective ban on the cheapest form of new power generation looks increasingly perverse. For a Government committed to making energy cheaper, this risks not only locking people into higher bills, but also runs contrary to its aim of having the lowest energy costs in Europe. These blustery isles have no shortage of wind and while other European nations are going large on onshore wind the UK is starting to fall behind by not making the most of our natural resource.

“David Cameron promised no new subsidies for onshore wind. But it now doesn't need a subsidy – research indicates fixed-price contracts would more than pay for themselves. So, given that the government also knows it needs new low-carbon policies the question is, why not enable onshore wind where local people want it and where it won’t harm wildlife, while continuing to support a healthy mix of other low-carbon energy generation?”

Analysis conducted before the recent round of offshore wind auctions, which resulted in record-breaking low prices, suggested that new onshore wind could be built at prices below £50/MWh (per megawatt hour), cheaper than the forecast price for new gas-fired capacity (£66/MWh). This would make onshore wind ‘subsidy free’ even when additional costs relating to intermittent generation are included.

Dr Jonathan Marshall, ECIU energy analyst, said:

“Changing tack on onshore wind would be widely supported. People are overwhelmingly in favour of renewable forms of energy, and onshore wind is one of the most popular forms of generation; surveys show that people are far keener on living next to an onshore wind farm than a fracking site or a small nuclear reactor.

“The opportunity of repeating the British success story on offshore wind should also be a powerful motivator, and there would be added benefits in diversifying the UK’s energy mix. A policy rethink on onshore wind looks increasingly overdue.”

The report finds that Britain is set to fall to bottom place amongst comparable EU nations in terms of wind farm efficiency without investment in new technology. It also observes that without a domestic market, the UK risks losing its place as one of the global centres for onshore wind energy, in manufacturing and installation, and in associated financial and legal services.

Investment in new onshore wind today would also allow the UK to benefit from developments in technology; currently, the UK fleet is one of the least efficient, and therefore least economically competitive, amongst rival EU nations.