Offshore wind generation costs could be reduced by 30% by 2020 but will cheaper wind energy mean lower business electricity prices?
The cost of generating electricity through offshore wind turbines could be reduced by a third by 2020 say reports from the government and the wind industry. Opponents of wind power have frequently sited costs as one of the reasons they are against wind energy and the part it plays in the energy mix. But will cheaper wind power mean lower business electricity prices?
If the reports are to be believed then the cost of offshore wind energy could be reduced by over £3bn a year. Not only that but it means offshore wind would be generating a fifth of the UK’s electricity, one of the government’s targets.
One of the reasons blamed for increasing business electricity prices is the subsidies included in energy bills which are used to subsidise renewable energy such as wind power in order to encourage investment. Does this mean therefore, that by 2020, business electricity prices will be lower?
It seems not. In order to bring down costs more investment is needed and offshore wind, it is argued, will remain more costly than other sources of energy generation.
The Crown Estate said that if offshore costs were to be reduced quickly then they would need bigger turbines, more competition, improved wind farm designs and installation methods and deep water foundations would have to be produced on a mass scale.
To further complicate matters Scottish Power warned that ambiguity over subsidies and energy policy was damaging investor confidence. Chief corporate officer at Scottish Power, Keith Anderson, said changes to financial support “could set an unwelcoming precedent for the UK energy sector and potentially have an adverse effect on investor confidence at a critical time for the UK energy industry”.
It seems that if the cost of wind energy is to be reduced then substantial investment is needed both now and in the future. Even if costs do eventually fall business electric prices are not likely to go down and business energy costs will remain one of the top concerns for small businesses.