Is Offshore Wind Really Cheaper Than Gas? A Reality Check

By EVWorld Si

The Critic''s July 2025 article challenges claims that offshore wind is cheaper than gas by questioning the reliability of headline-levelized cost of electricity (LCOE) comparisons. It argues LCOE ignores system constraints such as intermittency, grid integration costs, and regional market value of power.

The Article's Main Arguments

• LCOE assumes all generated megawatt-hours are equivalent - but wind output is intermittent and often poorly timed relative to demand.
• Transmission and grid reinforcement costs (e.g. subsea cables, new lines) add £20–30/MWh for remote offshore sites - a burden not captured in LCOE.
• Wholesale market prices often drop when wind supply is high, requiring balancing and curtailment costs that aren’t attributed back to wind generators.

What the Broader Data Shows

Recent studies offer a mixed view:

• According to Lazard, offshore wind LCOE averages $72–140/MWh—typically higher than gas combined-cycle (CCC) at $45–74/MWh, though competitive with peak gas costs.
• System-level cost models (like Bank of America’s LFSCOE‑95) show offshore wind adding substantially higher integration costs, making firmed renewables cost upward of $131/MWh versus $32–40/MWh for gas.
• DOE modeling projects offshore wind costs declining to $53–75/MWh by 2035, while gas-based generation remains relatively flat.
• Empirical UK auction data shows many offshore projects contracted at £39–41/MWh (2019 CfD round). Yet future auctions and developers cannot sustain £85 / MWh+ strike prices.

Summary: What’s the Real Picture?

The Critic article correctly warns that LCOE alone doesn’t reflect integration costs or power value timing. Still, recent global data indicates offshore wind can be more expensive than low-cost gas but cheaper than peaker plants or fossil fuels when factoring capacity and emissions.

Offshore wind is on a steep cost-down learning curve—but its value depends heavily on grid flexibility, storage, and market design. Policymaking should incorporate both LCOE and system-level impacts to avoid misleading conclusions.

Sources

• https://thecritic.co.uk/is-offshore-wind-really-cheaper-than-gas/
• https://en.wikipedia.org/wiki/Cost_of_electricity_by_source
• https://thecritic.co.uk/is-offshore-wind-really-cheaper-than-gas/
• https://www.energy.gov/eere/wind/articles/driving-force-projecting‑offshore‑wind‑energy‑costs
• https://www.undp.org/sites/g/files/zskgke326/files/2025-01/analysis-of-ev-battery-end-of-life.pdf

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