A radical windmill design could hold the key to making offshore wind power more economical and helping the UK meet its ambitious renewable energy targets.

The Aerogenerator turns conventional windmills on their side, with a 100m tall V-shaped blade rotating on a vertical, rather than the usual horizontal, axis. By building all the moving parts and machinery at the base of the windmill rather than the top of a tower, its designers claim it will be easier to build and maintain, making its renewable electricity cheaper.

Nova (Novel Offshore Vertical Axis Demonstrator) — which came up with the design — is one of three projects being funded by the government-backed Energy Technologies Institute (ETI) as part of a project to find ways of bringing down the cost of offshore wind power.

The UK has the biggest wind resource in Europe - some estimates put the UK's share at one-third of the continent's total. Taking advantage of the country's potential wind power will be critical in meeting the targets set by government for the UK to meet 15% of its energy needs from renewable sources by 2020.

In January, the government announced a £75bn programme to build 25GW of offshore wind turbines. The nine sites in line for development in the Crown Estate's programme — including Dogger Bank, the Bristol Channel, the seas off Norfolk and the Firth of Forth — are all further away from the coast and in deeper waters, around 30m, than any existing offshore project, and therefore more challenging to build.

"The current cost of electricity by offshore wind is somewhere between 12-15p per KWh, that's about double the cost of onshore wind and three times the cost of conventional generation. Our job is to significantly reduce that. By 2020, we want it to be comparable to onshore generation. As we move to 2050, we want it to be comparable to conventional generation," said Grant Bourhill of the ETI.

He said that traditional offshore windmills seemed to have reached their economic limit with the huge 10MW turbines that are planned for the next few years, but Nova could potentially deliver more. "No one understands the economic limits for vertical-axis and it may be the economic limit is significantly better than a 10MW can provide, so we will be able to generate electricity at a much lower cost. The design could be more reliable and the maintenance costs could be significantly lower because the main components are actually closer to sea level than they are with the horizontal-axis design," said Bourhill.

Nova, which has collaborators from Cranfield, Sheffield and Strathclyde universities, is being developed by OTM Consulting Limited. The team aims to have 1GW of offshore vertical axis turbines installed by 2020, with a demonstrator Aerogenerator turbine built offshore by 2015. Each windmill would be designed to generate between 5MW and 10MW of power but, because each would be cheaper to build than an equivalent modern turbine, the overall cost of an offshore wind farm, and the electricity, should be lower.

The ETI's strategy for offshore wind is to find ways to make this source of energy much cheaper and more reliable. The other two projects funded by the institute's £20m offshore scheme are Helm wind, a consortium led by energy company Eon that is focused on examining how conventional windmill designs can be made more cheaply, and Project Deepwater, a design for floating windmills out at sea led by Blue H Technologies and which includes collaborations from BAe Systems and EDF energy.

The ETI's funding for the three projects so far is aimed at producing detailed design specifications for the three ideas. Bourhill said that, once these plans have been evaluated by the institute, one of the ideas will be in line for a multi-million pound demonstration project.