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The new economics of offshore wind

This cross-industry study, published by Aurora Energy Research on the 18 January 2018 discusses the ‘new economics of offshore wind’.

Key findings include:

  • The volume of offshore wind in the Great Britain (GB) capacity mix could be materially increased through intelligent market design and regulation, including the continuation of the Contract-for-Difference (CfD) regime. Aurora has analysed 2 policy mechanisms to achieve greater offshore wind penetration:
    • Providing zero-subsidy CfD contracts
    • Allowing offshore wind to ‘revenue-stack’
  • Aurora’s modelling indicates that together these measures should increase potential offshore wind capacity on the GB system up to approximately 30GW by the 2030s up from the 6GW of operational offshore wind on the GB system in 2017. This provides a range of benefits to the GB power system:
    • Helps reduce carbon emissions to approximately 60 g/kWh by the late 2030s – significant additional offshore wind capacity will be a critical component if GB is to meet long-term carbon targets
    • Reduces system costs by ~7% which results in an annual savings to consumers of ~£1-2 billion per year by the 2030s. This equates to a saving on household electricity bills of ~£20 per year
    • Limits offshore wind’s system integration costs (‘cost of intermittency’) to £6-7 per MWh in the 2030s
    • Signals a viable long-term route to market for offshore wind to provide further confidence in the offshore wind industry in GB, helping to secure further investment, jobs and supply chain opportunities
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