Article: Offshore wind industry to slash costs by over 30% in next seven years
Date: June 19, 2012

A new report launched today by the industry-led Offshore Wind Cost Reduction Task Force shows that the UK is on course to reduce the cost of electricity from offshore wind substantially over the next seven years.

The report builds on detailed evidence in a study by The Crown Estate, also published today, to show how reductions can be achieved, setting out specific actions to drive costs down by over 30%.

This huge cut will see the cost of delivering 18GW of electricity from offshore wind farms (around 20% of the UK’s total electricity demand) drop from £140/MWh today to £100/MWh by 2020, saving over £3 billion per year. In achieving this, offshore wind will take another major step towards being fully competitive with other forms of energy generation which will make up the UK’s energy mix.

The Offshore Wind Cost Reduction Task Force report lays out 28 specific recommendations on how the industry can reduce the cost of generation, covering Supply Chain, Innovation, Contracting strategies, Planning and Consenting, Finance and Grid. Within these the Task Force has highlighted that more efficient contracting and the concept of “alliancing”, used successfully by the North Sea oil and gas industry to reduce risk and bring down costs, have the potential to be transformative in lowering cost and improving working practices.

Charles Hendry, Energy Minister, said:

“Offshore wind will be a vital part of a diverse and secure low carbon energy mix in the decades ahead. But we are clear that costs must come down. I am encouraged that this report shows that substantial cost savings can be achieved if action is taken and I welcome this valuable work. I look forward to working closely with industry to take this forward further and deliver these ambitious targets.”

Fergus Ewing, the Scottish Government Energy Minister said:

“I welcome the reports from the Cost Reduction Task Force and The Crown Estate Pathways Development study, which outline a realistic path to achieving a significant reduction in the cost of offshore wind, which is essential for us to maximise our offshore wind potential and reap the associated economic benefits. Leases have already been granted for 10GW of offshore wind developments in Scotland’s waters, with companies like EDPR and Repsol committed to developing our offshore potential. In addition, international companies such as Samsung, Mitsubishi and Gamesa, based here in Scotland, are developing the next generation of turbines. Important innovative work that will ensure offshore wind is a competitive and reliable source of renewable energy for decades to come.”

Andrew Jamieson, Chair of the Offshore Wind Cost Reduction Task Force, ScottishPower Renewables Policy and Innovation Director, and Chairman of RenewableUK said:

“To ensure that the UK’s world-leading offshore wind sector expands rapidly over this decade and fulfils its massive potential within the UK’s energy mix, it is vital that costs are reduced. In doing this not only will we reduce risk and drive investment into the sector, we will further protect consumers from increasing energy costs, reduce the industry’s requirement for financial support and deliver jobs and energy security for decades to come. Having considered the evidence before us, the considerable expertise of the Task Force presents some challenging recommendations to both industry and Government but it is crucial that we all begin work immediately. In doing so I am confident that we can achieve our cost saving goal and create huge economic opportunities for the UK in both the domestic and international energy markets”.

Leading figures in the sector highlighted the importance of the two reports.

Maria McCaffery, Chief Executive, RenewableUK, said:

“By committing to slash the costs of developing offshore wind the UK has once again demonstrated why it is the world leader in this industry. RenewableUK is ready to play its part to encourage the industry to follow the recommendations in the report.”


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