Renewable energy potential

2nd March 2015

"Onshore wind success shows need for greater offshore ambition."

First Minister Nicola Sturgeon is calling on the UK Government to increase its ambition to develop offshore wind.

Ms Sturgeon pointed to the fact that Scottish wind power is now substantially cheaper than nuclear, and said the lesson of the last decade of onshore wind development is that cost reductions require a meaningful long-term commitment to support investment at large-scale.

The results of the UK Government's first Contracts for Difference auction, announced last Thursday, show that real cost reductions are now being achieved in the supply of wind energy in Scotland. Onshore wind projects are now bidding successfully to supply power at a price substantially less than the £92.50 per megawatt hour that consumers will have to pay for the Hinkley C nuclear project.

However it is now clear that the future budget for offshore wind is unlikely to support Scottish ambitions to develop an industry. Only one Scottish offshore wind farm received a contract, while two major offshore wind farms were refused - leaving uncertainty over their future development.

Ms Sturgeon believes now is the time for greater ambition and insists the UK Government must act immediately to provide confidence to the offshore wind industry, ensuring there is sufficient budget allocated to auctions to deliver the large-scale deployment and cost reduction that we have seen in onshore wind.

Speaking ahead of her visit to Whitelee Windfarm, Scotland's largest onshore windfarm, the First Minister said:

"Scotland has made huge progress in renewables deployment in Scotland, generating enough renewable energy to meet 44 per cent of Scotland’s annual electricity demand, generating millions of pounds of community benefit, and displacing an estimated 12 million tonnes of carbon dioxide across the UK.

“The results of the UK Government’s Contracts for Difference auction, announced last week, prove that renewables in Scotland are cost effective, with projects accounting for nearly half the allocated capacity but only an estimated one third of the cost.

“The results also show that Scottish onshore wind is now considerably cheaper than new nuclear; thanks to sustained support and large-scale deployment of projects such as Scottish Power’s Whitelee development.

“I congratulate the Neart na Gaoithe project in the Firth of Forth and Scottish Power’s East Anglia development for securing contracts. These projects demonstrate the value of developing this industry: real jobs, clean electricity and valuable contracts for suppliers.

“The UK Government must now show greater ambition for the Scottish offshore sector. We are already seeing cost reductions in offshore wind but the scale of growth planned for the sector will be a key driver to delivering further cost reductions for the long term benefit of consumers. It is essential that the UK Government provide confidence to the offshore wind industry that sufficient money will be available in future allocation rounds to allow the sector to move forward with assurance and enable costs to be further reduced.

“Without this ambition Scotland risks missing the opportunity to cement the growth of an industry, with significant supply chain benefits, while decarbonising our energy supply."

Whitelee is Europe's largest onshore windfarm with 215 turbines, and an overall capacity up to 539MW. Whitelee will be capable of generating enough clean, green energy to power the equivalent of approximately 300,000 homes, more than the 295,000 households in the City of Glasgow.

Scottish projects account for 993 MW of the total 2,139 MW given contracts.

The auction price for onshore wind per megawatt hour ranged between £79.23 in 2016-17 and £82.50 in 2018-19, down between 17% and 13% on the administrative price cap of £95 per megawatt hour.

The auction price for the two successful offshore wind projects per megawatt hour ranged between £114.39 and £119.39, down between 18% and 14% against the administrative price cap of £140 per megawatt hour

Data published by DECC shows that an estimated 11.9 million tonnes of carbon dioxide were displaced by Scotland’s renewable electricity generation in 2013, an increase of over 14% on the 10.4 million tonnes of CO2 displaced by the sector in 2012.

Details of the UK Government’s Contracts for Difference auction can be found here: https://www.gov.uk/government/news/world-leading-auctions-to-provide-major-green-electricity-boost