Against expectations, all of the UK’s main electricity generation technologies have been subject to cost increases in recent years. Fossil fuel price increases have led to increases in the generation costs of conventional power stations. In addition, other exogenous factors such as steel and copper prices have negatively affected the construction costs of many generation options including, for example, offshore wind power.
The UK now has a commitment to reduce its carbon emissions by 80% over the next four decades. Choosing a cost-optimal generating mix is particularly important given the long life of the assets in question and the consequent long-term nature of decisions taken now. Making those decisions therefore requires robust and reliable cost estimation methodologies.
This project considered the role and importance of cost estimates and the methodologies employed to estimate future costs in the UK electricity generation sector. It asked how robust these methodologies are, examined the circumstances under which it is appropriate to use cost estimates to compare between different technologies, and how the potential for cost reductions are represented.
The final synthesis report and six technology-specific working papers completed during this project can be found in the publications below.
