U.K. offshore wind power is on target to become the cheapest source of large-scale clean energy, surpassing the government-mandated price target four years early.
The levelized cost of energy for offshore wind — a benchmark measuring affordability over the lifetime of generation assets — dropped below 100 pounds ($125) a megawatt-hour in 2016, according to a report published Tuesday by the the U.K.’s Offshore Wind Programme Board, a group that includes industry and government representatives. The goal had been to pass the 100-pound threshold by 2020.
“This growing industry will be an important part of the government’s new industrial strategy, and will be underpinned by 730 million pounds of annual support for renewable energy over the course of this Parliament,” said U.K. Energy Minister Jesse Norman.
The cost of offshore wind energy has dropped because of larger, more efficient turbines, competitive auctions and cheaper capital, according to the report. The 32 percent drop in levelized costs last year, to 97 pounds a megawatt-hour, made offshore wind cheaper than nuclear power.
The levelized cost of energy for the the U.K.’s planned reactor at Hinkley Point has been estimated at $187 a megawatt-hour, according to Bloomberg New Energy Finance. Unlike wind power, reactors can provide baseload electricity unaffected by the weather.
The U.K. will host a second auction for new offshore wind in 2017, which is expected to further decrease the cost as bidders compete for project permits and power purchase agreements.