Offshore wind farms now cheaper for Britain than nuclear option

In a government auction that handed out power-purchase contracts worth £176m a year, every bid aimed at the construction of offshore wind farms and other renewable technologies came in below the £92.50 per megawatt-hour price tag attached to the oft maligned Hinkley Point C nuclear reactor.

Danish utility group Dong Energy came in with an offer of £57.50 per megawatt-hour at its Hornsea 2 offshore wind farm, with EDP Renovaveis and Engie set to receive the same amount for their Moray Firth East project.

The cost of generating electricity from offshore wind farms had dropped 50% in the UK over the past decade, demonstrating how clean-energy technologies were rapidly becoming rivals to traditional forms of power generation.

"This is a breakthrough moment for offshore wind," said Dong's Matthew Wright. "It will also deliver high-quality jobs."

The agreements were said to be over a fixed period of 15 years, with a contract for difference mechanism, meaning that if the wholesale rate were lower than the set price, the government would have to pay the developer the difference. However, if it was higher, the company would be required to reimburse the government.

"We've placed clean growth at the heart of the industrial strategy to unlock opportunities across the country while cutting carbon emissions," said minister for energy and industry, Richard Harrington. "The offshore wind sector alone will invest 17.5 billion pounds in the U.K. up to 2021 and thousands of new jobs in British businesses will be created by the projects announced today."

In total, the 11 projects selected by the government would generate 3 gigawatts of capacity at a price lower than that of Hinkley Point. The most expensive being 19% cheaper than the nuclear power plant, with the cheapest coming in at over a third less.