Offshore wind cheaper than new nuclear power for first time – but will it change Government policy?

The cost of new offshore wind power is set to fall by 50% over the next five years following the award of new government contracts.

The results of the latest auction for new projects were cheered by environmental campaigners as the contracts – which guarantee a set price for power – tumbled to record lows.

The cost fell to £74.75 per megawatt hour (MWh) for projects delivered in 2021/22 and £57.50 for projects in 2022/23.

That compares with £92.50 MWh for the new Hinkley Point C nuclear power station – due to start generating electricity in the latter half of the 2020s.

:: Hinkley Point C hit by £1.5 over-run and delay

The results of the auction for 11 new contracts, which also included biomass and waste plant energy schemes, should help put downward pressure on household bills in the years ahead.

The reductions were put down to lower costs across the renewable energy sector as it continues to grow.

Factors included the downturn in the oil and gas sector, the availability of larger turbines and a more competitive supply chain.

The Government said the new UK-wide projects – the biggest of which Dong Energy’s Hornsea Project Two off the Yorkshire coast – would create thousands of jobs and provide enough power for 3.6 million homes.

Ahead of the publication of its Clean Growth Plan, energy and industry minister Richard Harrington said: "We’ve placed clean growth at the heart of the Industrial Strategy to unlock opportunities across the country, while cutting carbon emissions."

Lawrence Slade, chief executive of energy industry body Energy UK, called on ministers to build on the UK’s lead in renewables.

He said: "This (auction) shows what can be achieved by providing the necessary certainty for investment, which drives down the cost of decarbonisation, benefits customers and the wider economy, and creates highly skilled jobs and stimulates growth in rural economies."

Caroline Lucas, the co-leader of the Green Party, said the figures achieved should be the "nail in the coffin" for new nuclear.

She said: "While clean, green wind power has the potential to seriously cut people’s bills, the Government’s undying commitment to new nuclear risks locking us into sky-high prices for years to come.

"The Government should now commit to this technology – and scale up investment in offshore wind so that it becomes the backbone of British energy."

The nuclear sector argues that offshore wind is one part of solving the UK’s energy challenge through a low carbon future.

It points out atomic power is more reliable, despite higher costs.

(c) Sky News 2017: Offshore wind cheaper than new nuclear power for first time – but will it change Government policy?