Securing the benefits of offshore wind for the UK

Offshore wind is expected to play a key role in delivering the UK’s clean energy future, alongside other low-carbon technologies. Baringa’s analysis, undertaken in advance of the publication of the CfD AR7 results, shows that timely investment in offshore wind can offer material benefits to consumers, the economy, and national energy security. Our study looks at the impact of a potential delay in 3GW of offshore wind capacity.

Key findings of our study are:

• Every year of delayed offshore wind investment adds £362m to consumer energy costs, primarily through an increase in wholesale prices. Government could allocate up to 8GW of capacity in the next CfD auction round at a clearing price of £94.5/MWh while keeping consumers cost neutral.
• Delaying offshore wind could be associated with significant wider socioeconomic costs:
  o    £6 to 9 billion in gross value added.
  o    4,500 green jobs.
  o    12 TWh of renewable electricity lost annually.
  o    1,950kt additional CO2 emissions each year.
•  Offshore wind provides a stable, domestic source of energy, reducing reliance on imported gas and insulating consumers from volatile global markets. Building 3GW of additional offshore wind could save consumers >£2bn per year under a gas price shock scenario. 

Using the Secretary of State flexibility to allocate projects in the CfD AR7 beyond the current budget would allow to drive the above benefits for consumers and significantly close the gap to CP 2030 targets.

Our accompanying report, commissioned by Masdar, draws on Baringa’s in-depth analytics of the UK energy market and expertise in offshore wind deployment, to highlight the importance of delivering offshore wind in a timely manner to support consumers, the economy, and energy resilience.  

To find out more get in touch with Vlad Parail or Manon Derelle.