Onshore wind could deliver £1.6 billion benefit to UK consumers

01 August 2018 Consultancy.uk 3 min. read
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As the renewable energy industry continues to make strides in terms of efficiency and profitability, previously fossil-fuel-centred corporations are turning toward green alternatives to ensure they maintain their grip on the market. According to a new report, as they do so, and adopt more onshore wind farms in particular, British consumers could be saved multiple millions.

Forecasts show that the costs of new onshore wind projects will drop beneath the UK Government’s forecast wholesale electricity price from 2023, delivering a net benefit for UK electricity consumers. According to new analysis from renewable energy consulting firm BVG Associates, onshore wind is the cheapest form of low carbon electricity generation available to the UK, with the forecast drop new projects’ costs demonstrating net benefit for UK consumers. As a result, awarding contracts for 5 gigawatts (GW) of new onshore wind power between 2019 and 2025 could continue this trend and deliver a net payback to UK consumers of £1.6 billion.

The report, supported by German energy consultancy innogy, ScottishPower Renewables, Vattenfall, and Statkraft, has urged five new Contract for Difference (CfD) auctions to be held from 2019, and at 18 month intervals thereafter. A CfD is a long-term contract between a generator and the Low Carbon Contracts Company to incentivise investment in UK low-carbon electricity generation. Each one has a maximum capacity of 1GW, and BGV’s study believes that a clear commitment to five auctions would stimulate supply chain investment, increasing the already high proportion of UK content in projects to almost 70%. The biggest opportunities are in fabricating towers and blades, part refurbishment and the development of UK installation teams.

Net payback to consumer from the five CfD auctions

Commenting on the findings, Bruce Valpy, Managing Director at BVGA said, “It is good to get these messages into the public domain. As the onshore wind industry moves ‘subsidy free’, recognising its role in job and value creation in local neighbourhoods is important. In the UK, we need to build a sustainable electricity mix that plays to our strengths in terms of natural resources and capable workforce.”

Over the five auctions, researchers anticipate that fewer than 2% of projects would be built in England made up of small scale projects (sub 50MW) of a type typically developed by communities, while 86% of the projects by capacity would be built in Scotland, and 12% in Wales – both sites of lower than average employment. As a result, around 18,000 skilled jobs would be supported during the peak years of construction, with 8,500 people employed in long-term skilled jobs when all the wind farms are operating, with 60% of the jobs being created in Scotland, and 17% in Wales. England would still see 23% of these roles, as that is where many firms’ HQs are located.

Jobs (full-time equivalents) in England, Wales and Scotland created by the five CfD auctions

Guy Mortimer, Vattenfall’s UK head of onshore wind development, remarked, “The UK Government has identified clean growth as a Grand Challenge for the future. With political support, onshore wind, as evidence from the BVG report confirms, will rise to meet that challenge, lowering bills for British households and creating interesting and inspiring jobs for British workers.”

Tanya Davies, Head of Onshore Wind Development, innogy Renewables UK added, “The evidence is clear, not only can Onshore Wind enable the UK to meet its climate goals more cost efficiently to the benefit of consumers, it also offers huge opportunities for the wider UK economy. It’s now time to allow Onshore Wind to participate in future auctions.”