23 Jan New economics of offshore wind in Great Britain shape the future
Aurora Energy Research have released a cross-industry study looking at how the current shape of the offshore wind industry in Great Britain combined with intelligent market design and regulation in coming years could drive up offshore wind capacity five-fold by 2030.
As wind power output in the United Kingdom exceeded 10 GW for the first time on 13 January (according to data by Drax Electric Insights) – supplying 29% of the country’s total demand at one point – a new cross-industry study by Aurora Energy Research shows the region’s potential is way higher, even just in the offshore segment.
Authors of the report indicate that industry and supply chain maturation, aggressive competition, rapidly falling costs, and clarity over future government support have combined to create significant optimism and momentum for British offshore wind.
“Massive technological progress has fundamentally changed our understanding of offshore wind from a technology which provides carbon-free MWhs, to one which provides multiple economic benefits to the GB power system,” say the authors. “The fierce competition that has driven down offshore wind costs has encouraged owners and operators to look for avenues to squeeze additional value from their assets. This has resulted in increased interest in alternative revenue streams and ‘revenue-stacking’ business models.”
They go on to highlight that a focus on system integration costs has encouraged the industry to develop solutions that minimise offshore wind’s externalities. “Developers and operators are developing a range of solutions to make offshore wind a part of the solution to minimise system costs and ensure a balanced grid. This provides additional impetus for the emergence of the new modes of operating offshore wind assets.”
Aurora Energy Research suggests these factors have created a robust platform for future growth, which could be further fuelled through intelligent market design and regulation: providing zero-subsidy Contracts for Difference (CfD) and allowing offshore wind to ‘revenue-stack’.
Aurora’s modelling indicates that together these measures should increase potential offshore wind capacity in the GB system to approximately 30 GW by the 2030s, up from the 6 GW in 2017.
This growth, Aurora suggests, could reduce system costs by ~7%, generate annual savings to consumers of ~£1-2 billion per year, and limit wind system integration costs (cost of intermittency) to £6-7 per MWh.