The UK can achieve its target of 43GW of offshore wind capacity by 2035 without increasing costs for consumers if the upcoming Allocation Round 7 (AR7) secures projects priced up to £94 per megawatt-hour, according to new analysis by Aurora Energy Research.
The study, commissioned by RWE, concluded that the government could expand the AR7 budget to purchase any volume of fixed-bottom offshore wind below that strike price without adding to billpayer costs. Aurora said lower wholesale electricity prices from additional offshore wind generation would offset higher Contracts for Difference (CfD) levies over the next decade.
The report also pointed to broader economic and environmental benefits from meeting the 43GW goal, including the creation of 45,000 jobs, a 44% reduction in gas dependence and a 45% decrease in grid carbon emissions by 2035.
Nick Civetta, project leader at Aurora Energy Research, said: “We have determined that, relative to buying no further offshore wind, delivering on government offshore wind targets is possible at no additional cost to the consumer at a strike price of up to £94/MWh, which is over £10 above last year’s allocation round.” He added: “The key takeaway is that the expansion of the UK offshore wind industry to hit long-stated targets is possible at a price that will not adversely affect billpayers.”
RWE welcomed the findings. Tom Glover, the company’s UK country chair, said: “We welcome this new analysis from Aurora demonstrating that the UK’s offshore wind ambitions can be met whilst adding no additional cost to consumer bills.” He added: “There are no trade-offs required, this can deliver for billpayers, economic growth and clean power at the same time.”
