It does so with the aim of helping policymakers attain an important, urgent policy objective: managing the decarbonisation of the electricity sector, while maintaining affordability and energy security.
When this is done the conclusions show that a UK generation portfolio dominated by unabated gas and coal would be the most expensive option, while developing a diverse incremental portfolio of assets including a significant amount of offshore wind lowers risk and the expected cost of electricity to UK consumers. The Report also suggests that adopting a carbon tax in place of targeted support for specific technologies will push up electricity prices and fail to deliver low cost decarbonised electricity.
• Putting coal and gas, which co-vary strongly and are price-volatile, into the UK’s energy portfolio increases the risk of dramatic price spikes which recent history shows are passed on directly to UK consumers.
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• Taking early steps to incentivise reduction in the deployment costs of offshore wind will significantly reduce energy costs.
• As a major indigenous resource, generating electricity from offshore wind will also provide a major source of economic growth and exports.
The report 'Capturing the Value of Offshore Wind', develops a policy framework to enable the most effective transition to a low carbon economy. Applying principles of investment theory, Dr Cooper shows that policy makers need to incentivise sources of energy that will provide a hedge against the risk of fuel price volatility and protect consumers from bearing the cost of that risk and uncertainty. Such an approach can adapt quickly to future unknown policy decisions, such as Germany's recent decision to abandon nuclear power.
For Mainstream, commissioning this report is part of the company's commitment to communicating the 'Value of Wind' – the understanding that the benefits to electricity consumers or taxpayers delivered by wind energy outweigh the costs.
The study is a companion paper to a Cebr report published in June this year, which revealed Offshore Wind would more than pay for itself in future and reap rich rewards in terms of UK jobs and GDP.
Dr Mark Cooper, author of the report, said: "In writing this report I hope to show that if energy policy is a series of hedges, with the excellent resource the UK has in offshore wind, the first hedge UK policymakers should want to buy is wind. Offshore wind is the best possible resource to enable the UK to keep its options open, costs down and energy secure. Building out the UK’s offshore wind resource will capture very significant benefits to the UK economy faster than by adopting other generation choices."
(CD)
