Renewable Energy

Energy and Climate Change written question – answered on 14th October 2013.

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Photo of Zac Goldsmith Zac Goldsmith Conservative, Richmond Park

To ask the Secretary of State for Energy and Climate Change

(1) what estimate he has made of when offshore wind will reach grid parity;

(2) what estimate he has made of when solar PV will reach grid parity;

(3) what estimate he has made of when onshore wind will reach grid parity.

Photo of Gregory Barker Gregory Barker The Minister of State, Department of Energy and Climate Change

The Department has a strong focus on reducing the cost of renewable technologies.

Looking forward, DECC publishes levelised cost estimates of various generation technologies on the DECC website. The levelised cost of a particular generation technology is the ratio of the total cost of a generic plant to the total amount of electricity expected to be generated over the plant’s lifetime (per megawatt-hour). The latest published figures are available at:

https://www.gov.uk/government/publications/decc-electricity-generation-costs-2013

As you can see from the figures in this report, the levelised cost of onshore wind, offshore wind and solar PV are expected to fall over time. This is reflected in the proposed strike prices for such technologies in the draft EMR delivery plan, which shows costs falling for all technologies over the coming years.

It is hard to estimate with certainty when grid parity will occur because of, for example, uncertainty on future electricity prices and different costs of different size and types of projects.

Taking account of those uncertainties, we might expect some projects within these technologies to reach parity with wholesale electricity prices in the latter half of this decade or 2020s, depending on the electricity cost price scenario used and the speed of cost reductions. Please note that for low-carbon generation grid parity does not automatically mean investments will occur as projects remain exposed to the risk of low wholesale prices and investors are unlikely to invest on the expectation that prices remain high enough.

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