Recommendation 10

The Department told us that its role is to enable competition to drive innovation and cost reduction, and that the best example of this is how contracts for difference have sustained investment and innovation from the private sector in offshore wind. It told us that costs fell far faster and more steeply than anyone was expecting. As an illustration, an assessment by the previous Department for Energy and Climate Change in 2012 estimated a cost of £125MW/h in 2025. The Department’s current estimate for that period is £50MW/h.30 It considers that the regularity of annual contracts for difference auctions will provide the industry with the confidence it needs to continue to invest and develop new project proposals.31