British offshore wind farms are about to get the lowest government subsidies ever, which will help bring down the cost of electricity for homes and businesses.
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A statement from the Department for Business, Energy, and Industrial Strategy said that the UK gave contracts to wind farms to sell power at fixed prices that were 5.8 percent lower than the last auction. Some of the winners were Orsted A/S, Iberdrola SA’s Scottish Power unit, Vattenfall AB, and a project that included AB Ignitis Grupe, EDP Renovaveis SA, and Engie SA.
The UK wants to have net-zero emissions by the middle of this century. Wind power is seen as a key part of the country’s plan to meet its climate goals. From 2026 on, the turbines will add about 7 gigawatts of clean power to Britain’s fleet. This will help the country reach its goal of installing 50 gigawatts by the end of the decade.
Renewables are good because they keep prices stable and provide energy close to home. In the past few months, the price of electricity in the UK has gone up a lot. This is because the price of natural gas has gone up a lot since Russia invaded Ukraine.
Wind farm owners can sell electricity for as little as £37.35 ($44.613) per megawatt hour in 2012, which is 5.8 percent less than the lowest bid in the most recent auction, which was held in 2019 and ended in a win for the lowest bidder. Taking inflation into account, that’s about £45.41 per megawatt hour, or about a quarter of what a day’s worth of electricity costs in the UK right now.
Even though the price of key metals like steel went up in the past few months and supply chain problems caused costly delays, the price of wind turbines has gone down. When the power is sent out, the prices will be changed to account for inflation.
In the past few years, the costs of offshore wind power have dropped by a lot because the UK has helped the industry make bigger, more efficient turbines.
