Policy Exchange: Onshore wind could be as cheap as gas by 2020
Onshore wind could be cost-competitive with new gas generation by 2020 but needs continued Government support to get there, a new report from centre-right think-tank Policy Exchange has found.
The report, Powering Up: The future of onshore wind in the UK, claims that onshore wind is the cheapest form of low carbon energy and “should logically continue to play a role in cutting carbon emissions”.
In June, the Government announced plans to end the Renewables Obligation (RO) subsidy for onshore wind from March next year. It also mooted the possibility of banning onshore wind from the RO’s replacement subsidy scheme – the Contracts for Difference auction.
Energy Secretary Amber Rudd said at the time that the UK already had enough onshore wind farms, which were also unpopular with the public and failed to deliver a stable energy supply.
However the Policy Exchange study claims: “A moratorium on onshore wind is likely to lead to a higher cost to consumers of meeting decarbonisation objectives.”
It dismisses Rudd’s concerns, saying that stability of supply to the grid has thus far been manageable, and will continue to be so, thanks to the development of energy storage and demand-side management.
It also pointed out that support for onshore wind is far higher than public support for fracking, which the Government is firmly backing.
The think-tank said that replacing 1GW of onshore wind with the equivalent amount of power from offshore wind would increase the cost to consumers by £75–90 million each year.
“On this basis, we recommend that the Government continues to pursue mature renewables including onshore wind, rather than abandoning them in favour of more expensive options,” said the report.
Policy Exchange said consistent support between now and 2020, alongside technological advances would put onshore wind on a competitive cost footing with new gas generation. It also called for a focus on sites in high wind-speed areas of the country - predominantly Scotland.
The findings back up a recent report from RenewableUK, which projected onshore wind to deliver a levelised cost of £64–69 per MWh in 2020, down from an estimated £75–90 per MWh in 2014 .
Responding to today's Policy Exchange findings, RenewableUK deputy chief executive Maf Smith said: "The case is clear. Onshore wind is the lowest cost option for Government if we are to decarbonise and replace old capacity set to close over the next few years.
“Onshore wind is supported by a clear majority of the British public and is a great British success story, delivering high UK content and investment into the UK economy. The further north we go in our economic powerhouse, the greater the economic importance of onshore wind.
“Industry shares Government’s ambition to end subsidy and this report confirms that onshore wind has now arrived at the point where it can compete head to head with high carbon alternatives like gas. The challenge is how Government supports onshore wind moving into a competitive market place.”