To curb the current climate crisis, investment in renewable energy production is key. Part of that investment no longer only provides a social and ecological benefit, but also an economic one for various European governments and their citizens.
As explained in Nature Energy, the research focused on offshore wind energy auctions carried out by the governments of five European countries.
Wind power production in Germany and the Netherlands is close to being subsidy-free, allowing them to be even more competitive than fossil fuel production, which remains heavily subsidized.
However, due to the way subsidies work in the UK, the study suggests that wind power production here will soon lead to “negative subsidies”, with new wind farm projects returning money to the government, which will hand it over to the government. citizens to pay cheaper electricity bills.
Offshore wind power will soon be so cheap to produce that it will wipe out fossil fuel power stations and may be the cheapest form of energy for the UK. Energy subsidies were used to increase energy bills, but in a few years cheap renewable energy will go down for the first time. This is an amazing development.
Dr. Malte Jansen, Imperial College Center for Environmental Policy.
In the UK, companies that want to build a wind farm have to bid on the amount of power they are going to sell to the government. The winning company enters into a “contract for difference.” If the price the company sets is actually higher than the cost of the electricity it produces, then the government will cover what consumers don’t in the form of subsidies.
However, it appears that the contracts awarded in September 2019 for £40 per megawatt-hour will end up being lower than the wholesale price, meaning the company will pay the UK government back so it can sell its electricity. This price was already one third lower than the cost established in the 2017 auction and two thirds less than in 2015.
This amazing progress has been made possible by new technology, economies of scale and efficient supply chains around the North Sea, but also by a decade of concerted policies designed to reduce the risk of investing in offshore wind power. , which has made financing these huge multi-billion pound projects much cheaper.
Dr Iain Staffell, Imperial College.
These new wind farms lay the groundwork for the rapid expansion needed to meet the government’s target of producing 30% of the UK’s energy needs from offshore wind power by 2030. Offshore wind power will be instrumental in helping the UK, and the world more widely, to achieve net zero carbon emissions, with the added benefit of lowering consumers’ energy bills.