OFFSHORE windfarms look set to offer significantly better value for money than the cost of nuclear power agreed with energy firm EDF for Hinkley Point C, according to the chief executive of RenewableUK.
While offshore wind continues to drop in price as more money is invested in it – costs have fallen by around a third over the last four years – the 35-year deal with EDF sets the price of nuclear power at more than twice the current retail price of electricity.
This is expected to rise further when inflation and soaring Brexit-related costs are taken into account.
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Hugh McNeal, a former civil servant in the now abolished Department for Energy and Climate Change (DECC), said the decision by ministers to end subsidies for onshore wind farms had been hard for the industry and the building of new turbines on land was expected to grind to a halt after next year.
Green energy subsidies are paid through energy bills, but MPs had criticised as “shambolic” government efforts to communicate the impact on consumers.
McNeal told an English newspaper he found the focus on the cost of new low-carbon power “a little bit odd” given the other factors that were driving energy price rises.
“We are perhaps a little bit overexposed to global markets over which we have no control, which fluctuate over time,” McNeal said.
He added that government officials should do more to spell out all the costs of energy to consumers. He said the impact of renewable energy subsidies on bills had previously been broken down, but the effect on bills from subsidies to coal power stations for backup power provision, for example, had not.
McNeal said he expected that offshore windfarms would secure a deal with the Government which was lower than the £92.50 per megawatt hour agreed with EDF for Hinkley Point C.
“I wouldn’t be surprised if it [offshore wind] cleared Hinkley prices,” he said of the bidding process for a £290m-a-year government subsidy pot in April. A 35-year deal with EDF was agreed last year.
McNeal added: “I don’t think there’s any doubt about the political commitment of any party, apart from perhaps Ukip, to offshore wind. I think it’s got an incredibly healthy future.”
“It is becoming ever more apparent that the Tory Government’s energy policy is dangerously out-dated and completely missing the point,” she said. With today’s revelation that offshore windfarms are expected to produce electricity at a lower cost per hour than the expensive white elephant Hinkley Point project – it’s clear the Tories are going to live to regret putting all their eggs in the nuclear basket.
“Offshore and onshore wind brought £11bn investment to the UK in 2016 and yet the Tories took away all investment in onshore wind as soon as they came to power.
“The cost of offshore wind energy has fallen by a third over the last four years and as the technology develops, who knows where we could be in another four years?”
She added: “The cost of Hinkley Point is already an unjustifiable extravagance and the Tories need to drop the rhetoric about renewable energy subsidies and face the reality that it is nuclear power, not renewables that will load billions on to household and business energy bills in the future.”
McNeal said he was confident that wind power in the UK would thrive after Brexit, and added: “The idea that we need a separate European package [of support] – that would be the crucial thing that would drive our industry – we don’t need that now,” he said.