Is Wind Power Cheaper Than Gas?

The ongoing debate about whether offshore wind power is cheaper than gas power continues. A comprehensive analysis reveals discrepancies in the costs of both energy types, highlighting the complexities involved in the comparison.

• Levelized Costs Misrepresentation: Discussions often reference official Levelized Costs published by BEIS in 2023, but critics argue that including carbon pricing for gas power is misleading, as it is a tax rather than a direct cost.

• Cost Comparison Methodology: A valid comparison should weigh the total cost of wind power against the fuel cost of Combined Cycle Gas Turbine (CCGT) power stations. CCGT must maintain full operation during standby periods, meaning any additional costs arise only when generating electricity.

• Current Energy Statistics: In 2023, gas power generated 101 TWh, constituting about one-third of total electricity in Great Britain. The projected gas price is around £24/MWh, translating to a generation cost of £45/MWh, with an annual cost of £4. 5 billion.

• Offshore Wind Cost Structure: The BEIS estimates capital costs for offshore wind at £2,200/kW. A new offshore capacity of 26 GW to generate 101 TWh would total £57 billion. Operating costs for offshore wind are estimated at £19/MWh, leading to a combined capital and operating cost of £86 billion over 15 years.

• Addtional Wind Power Costs: The cost for gas over the same period totals £67 billion, excluding substantial expected grid upgrades over £100 billion for new offshore capacity. Critics argue wind power costs are often underestimated.

• Existing Wind Power Costs: Current costs of wind power already exceed BEIS's optimistic estimates, confirming that gas power, specifically CCGT, remains less expensive.

The analysis indicates that CCGT power stations are cheaper than offshore wind power when considering all necessary costs. Current and projected data suggest that investing in wind energy would entail significant expenses, making gas power the more economically viable option. The debate continues, but it's clear that factors like fuel costs and standby expenses must be thoroughly considered before making definitive claims about the relative affordability of wind and gas power. 

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