Wind Power In The UK Could Soon Be So Cheap It Will Give Money Back To Government And Citizens


Dr. Alfredo Carpineti

Senior Staff Writer & Space Correspondent

clockJul 27 2020, 16:47 UTC

Offshore wind farm in the UK. Riekelt Hakvoort/Shutterstock

To curb the unfolding climate crisis, investment in renewable and low-carbon energy production is key. Some of that investment is now not only providing a social and ecological benefit but an economic one as well for several European governments and their citizens.


As reported in Nature Energy, the research focused on the offshore wind auctions held by the governments of five European countries. Wind production in Germany and the Netherlands is on the verge of not needing any subsidies, allowing them to be even more competitive than fossil fuel production, which remains heavily subsidized.

However, due to how subsidies work in the United Kingdom, the team suggest wind energy production here will soon generate “negative subsidies”, with new wind farm projects giving money back to the government, which will be passed on to citizens for cheaper energy bills.  

"Offshore wind power will soon be so cheap to produce that it will undercut fossil-fuelled power stations and may be the cheapest form of energy for the UK. Energy subsidies used to push up energy bills, but within a few years cheap renewable energy will see them brought down for the first time. This is an astonishing development," lead author Dr Malte Jansen, from the Centre for Environmental Policy at Imperial College, said in a statement.

In the UK, companies that want to build a wind farm have to bid on how much they will sell the energy they produce to the government. The winning company then enters into a "contract for difference." If the price the company sets is actually higher than the cost of electricity they produce, then the government will cover what the consumers don’t in the form of subsidies.


However, it looks like contracts awarded in September 2019 for £40 per megawatt-hour will end up being lower than the wholesale price, meaning the company will give money back to the British government to be able to sell its electricity. This price was already one-third lower than the cost set 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 policymaking designed to reduce the risk for investing in offshore wind, which has made financing these huge billion-pound projects much cheaper," Dr Iain Staffell, also at Imperial College, explained.

"These new wind farms set the stage for the rapid expansion needed to meet the government's target of producing 30 percent of the UK's energy needs from offshore wind by 2030. Offshore wind will be pivotal in helping the UK, and more broadly the world, to reach net-zero carbon emissions with the added bonus of reducing consumers' energy bills."