As a number of coal-fired power stations are being decommissioned in the UK, it is welcome news to hear from respected energy experts, Bloomberg New Energy Finance (BNEF), that the electricity produced by wind power is now the cheapest in the UK.
BNEF has conducted a new study and it has concluded that wind power generates the cheapest electricity in two European countries; the United Kingdom and Germany. That’s a first for a G7 economy.
In dollar terms, the cost of onshore wind power has fallen from $108 ( about £70) per megawatt-hour 12 months ago to $85 today. That’s large because wind turbines have become more efficient and are cheaper to build. A significant decline in borrowing costs, with bank lending rates at an all-time low, is a great boon for wind farms than for fossil-fuel plants. This is because far more of the cost of renewable energy projects related to their construction, which is largely funded by loans.
Onshore UK wind farms currently produce about 60 percent of the UK’s wind power output. They should continue to be the leading form of renewable energy for the next few years. And this is despite the UK Government having stopped subsidies and handing the final say on whether a wind farm project should go-ahead to local residents instead of Councils. By comparison, coal-fired power station costs have spiraled up from nearly $98 mWh to $115 and gas from $100 to $114. This is influenced by the EU agreed new rules that will greatly increase the amount non-green generators must pay for their carbon emissions.
Offshore wind generation, perhaps unsurprisingly, is more expensive and costs $175 mWh, according to the research, by BNEF. However, the BNEF figures are particularly welcome because there is a tendency for the UK general public to believe that renewables are really expensive; often fuelled by the anti-green lobby.