‘Onshore wind needs CfD support’, says Cornwall Energy

The government should “seriously consider” allowing established technologies such as onshore wind to enter upcoming Contracts for Difference (CfD) auctions, Cornwall Energy has argued.

Building more onshore windfarms would be the “best way” to meet emissions targets at the lowest cost to consumers, the group said.

“We are at a moment when continued challenges in decarbonising our energy mix are becoming clearer,” said associate for projects Gareth Miller. “Delivery risks surrounding new large-scale nuclear remain; the deferment of new offshore windfarms until after 2021 is slowing down the deployment of scale low-carbon capacity; and the absence of any dedicated support for [carbon capture and storage] and a juddering capacity market is stalling the ability to both build and make new gas plant genuinely clean.”

There is “emerging evidence” that onshore wind can outcompete alternatives on cost, “even on a whole-system cost basis”. Miller suggested onshore wind power could be delivered at a total cost of just £80/MWh (current prices). The figure was calculated by combining estimates of the levelised cost of energy by Bloomberg New Energy Finance and of system integration costs by NERA Economic Consulting and Imperial College London.

The technology would still require subsidies at that level. However, it would represent “one of the most economically efficient routes, given the equivalent level of subsidies for other technologies that might be deployed”. “For a government prepared to commit vast sums to the 3.2GW Hinkley Point C, the commensurate costs for delivering the same capacity of onshore wind, even with the costs of back-up added in, should make officials sit up and take notice”, he added.

Miller also drew attention to a gap in policy for the decarbonisation of heat and transport: “Arguably, no policy measures in heat and transport will have time to gather traction ahead of 2020, no matter how urgently they are introduced.” He said “mature and deployable technologies in the power sector” should be used to make up for the resulting shortfall in emissions reductions: “Onshore wind is rapidly financeable with an established supply-chain, experienced developers and an ability to be built quickly. An auction in 2017 could deliver significant new capacity ahead of 2020.”

Finally, he urged any decision makers worried about opposition from back-bench Conservative MPs to bear in mind where onshore windfarms would probably be built: “Such projects are likely to be located in the north of the UK, and in particular in Scotland, where public support for the technology is high, and political backing – particularly from the SNP government – is firm.”

In his last budget in March, former chancellor George Osborne revealed that £730 million of annual funding would be make available in the three auctions due to take place over the current parliament. He said £290 million would be up for grabs in the first auction, which will only be open to less-established ‘Pot 2’ technologies – most notably offshore wind. The auction was scheduled to take before the end of the year, although there have been suggestions it could be delayed until 2017.

It’s not yet clear whether established ‘Pot 1’ technologies will be able to enter either of the other two auctions. However, in her ‘energy reset’ speech November, former energy secretary Amber Rudd committed the government to phasing out subsidies for onshore wind.