Wind power costs may fall by 30pc

The report by the Offshore Wind Cost Reduction Task Group has concluded the burgeoning industry will be able to produce electricity at a price comparable to competing green technologies such as biomass power stations and onshore wind turbines by 2020, with careful collaborative working and further technological innovation.

Energy Minister Charles Hendry said yesterday the UK is now poised to take a “global leadership role” on offshore wind, and that there would be “great opportunities” for supply chain firms and manufacturers across the Humber region in the years to come.

German technology giant Siemens has already announced plans for one large turbine factory at Hull, and it is hoped other large manufacturers will follow suit before the end of the year.

But crucial to the Government’s plans to see 20 per cent of the UK’s energy being supplied by offshore wind by 2020 will be overall reduction in the cost of producing electricity so far out at sea.

To that end, Ministers set up the industry taskforce last year to study how the price of electricity produced by the new wave of offshore wind farms could be reduced by 30 per cent.

Task force chairman Andrew Jamieson said: “To ensure that the UK’s world-leading offshore wind sector expands rapidly over this decade and fulfils its massive potential within the UK’s energy mix, it is vital that costs are reduced.

“We will further protect consumers from increasing energy costs, reduce the industry’s requirement for financial support and deliver jobs and energy security for decades to come.

“Having considered the evidence before us, the considerable expertise of the task force presents some challenging recommendations to both industry and Government – but it is crucial that we all begin work immediately.

“In doing so I am confident that we can achieve our cost saving goal, and create huge economic opportunities for the UK in both the domestic and international energy markets”.

A separate report published earlier this week revealed the UK’s offshore wind industry could support almost 100,000 new jobs by 2020 if it expands as expected.

Many of those are likely to be in the Yorkshire area, with the Humber seen as an ideal location to construct the huge new turbines required.

Mr Hendry said he is hopeful other manufacturers will soon follow the lead of Siemens and open factories along the banks of the Humber.

“We’re seeing a lot of interest from a range of different companies,” he said. “But inevitably they need first of all to be sure of the market and how the new financing mechanism is going to work, and so the Energy Bill is critical for that process.

“We are in a very strong position. The decision Siemens has taken offers extremely positive long-term opportunities for the people of Hull and more generally across Humberside. This is the start of that process, and certainly the extent of the interest is at a level where we would have hoped it would be.”

Mr Hendry made clear that there will be huge benefits to local British firms as well as the major multinationals who set up factories to build the turbines.

“The lion’s share of the early investment will come from international investors, but then what they will be looking for is how do they set up their own supply chains to supply the component parts to them – and that’s where there will be real opportunities for British companies here,” he said.

“At the end of the day I’m entirely ambivalent whether it is a German company or a British company investing in manufacturing in Humberside. I think that’s a wonderful opportunity for the people of Humberside, or wherever else it happens to go.”