In a report published in March, The Royal Academy of Engineering revealed that electricity from offshore wind farms, currently the most viable renewable source, will cost at least twice as much as that from conventional sources. The independent study, commissioned from international energy consultants PB Power, puts all energy sources on a level playing field by comparing the costs of generating electricity from new plants using a range of different technologies and energy sources. Our cheapest electricity will come from gas turbines and nuclear stations, costing just 2.3p/kWh, compared with 3.7p/kWh for onshore wind and 5.5p/kWh for offshore wind farms.

In the case of wind energy it is also necessary to provide back up capacity for when the wind does not blow. In this report, a rather generous assumption of needing about 65% back-up power from conventional sources was made. The Academy had previously called for even higher back-up, more like 75 to 80%. Even so the cost of back up capacity adds 1.7p/kWh to the costs. Onshore wind generation is the cheapest renewable, but with back up, the report finds that it costs two and a half times as much as gas or nuclear.

Wind, nuclear and biomass generation all have the benefit of not emitting carbon dioxide, and the Academy/PB Power study also looked at the impact on costs of capturing carbon dioxide for all fossil fuels. This could add at least 2p/kWh for coal-fired generators and 1-2p/kWh for gas generators.

This study did not consider transmission costs to individual technologies or storage costs for gas to ensure security of supply - the market currently absorbs these through system operating costs or the cost of gas. However, providing energy a long way from the eventual customer will add to its cost. The report also notes that the renewables sector already benefits from subsidies worth around £485 million a year through the Renewables Obligation.