Putting the brakes on onshore wind could cost consumers £125 on bills

News reports [1] in the run-up to the publication of the Government’s Energy Security Strategy suggested that Ministers were poised to triple the UK’s onshore wind capacity to 45 GW by 2035, but the actual announcement contained limited ambition and no targets following reported pushback from some MPs.

The UK currently has 14GW of onshore wind [2] which will rise to 20GW with turbines that are under construction or have received planning consent. More projects are under development and could be awarded Contracts for Difference (CfDs), but can’t be guaranteed, so if the sector were to stop at 20GW and not reach the mooted targets, new analysis from the Energy & Climate Intelligence Unit finds that UK households could end up paying much higher energy bills.

In a similar gas crisis in the future, if onshore wind stayed at 20GW and didn’t reach the rumoured interim target of 30GW by 2030, the 10GW shortfall would effectively cost £4bn each year, equivalent to £50 per household. If the gas crisis was repeated in 2035 with a shortfall of 25GW of onshore wind, the cost would be £10bn each year, equating to £125 per household. [3].

Dr Simon Cran-McGreehin, Head of Analysis at ECIU, said:

“It’s difficult to predict exactly what the power system of the future might look like, and hopefully gas will be less dominant over wholesale prices, but these indicative figures show that the price of not investing in onshore wind is high.

“If the build-out of onshore wind is slowed again, in the event of another gas crisis those MPs falsely claiming turbines are unpopular could have to explain to their constituents why they are paying an additional £125 on their bills.

“Onshore wind is one of the most popular energy technologies with 80% of the public backing it, rising to 87% where households get cheaper bills from a local wind farm” [4]

ENDS

Notes to editors

1. https://www.telegraph.co.uk/politics/2022/04/01/thousands-turbines-built-treble-onshore-wind-power/
2. The UK’s onshore wind capacity is distributed as follows: 8.5GW in Scotland, 2.9GW in England, 1.1GW in Wales and 1.2 GW in Northern Ireland. Data for this analysis is taken from the UK Renewable Energy Planning Database: https://data.gov.uk/dataset/a5b0ed13-c960-49ce-b1f6-3a6bbe0db1b7/renewable-energy-planning-database-repd
   
3. The analysis assumes that all new onshore wind farms will receive Contracts for Difference (CfDs). The analysis uses the following assumptions: Contracts for Difference (CfDs) with strike prices of £48/MWh (similar to expected values for Allocation Round 4); day-ahead wholesale power price of £200/MWh (typical during current gas crisis); load factor of 30% (and could be higher in reality if more wind farms are in Scotland); 35% of UK electricity is used by households; and 28million households in the UK. Total savings under CfDs for an extra 10GW by 2030 would be £4bn, and for an extra 25GW in 2035 would be £10bn.
   
4. Polling taken from: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1064032/BEIS_PAT_Winter_2021_Energy_Infrastructure_and_Energy_Sources.pdf and https://theenergyst.com/half-price-sale-of-green-power-near-wind-turbines-yes-please-say-87-of-brits-in-poll/