Falling costs mean new windfarms are now £20 cheaper per megawatt hour than coal or gas-fired plants, according to new analysis

New onshore windfarms are now the cheapest way for a power company to produce electricity in Britain, according to Bloomberg New Energy Finance (BNEF).

Costs have dropped to $85 (£55) per megawatt hour (MWh) compared with the current costs of about $115 for constructing coal or gas-fired plants, its analysis found.

The price of wind, which has fallen from $108 just 12 months ago, compares with nuclear which Bloomberg assesses at $190 – the latter up on a year ago as project delays are factored in to developments.

The positive picture for renewable power in Britain is mirrored across the world with wind and solar technologies fast falling in price while fossil fuel costs continue to move upwards.

“Wind is now the cheapest technology in the UK and this means that old rules of thumb, such as ‘renewables are expensive’ or ‘unreliable’, need to be updated,” said Seb Henbest, head of Europe for BNEF.

“Some people still think that wind or other renewables are a luxury that we cannot afford in difficult economic times but costs have been falling fast and they are now competitive (to a greater or lesser extent) worldwide.”

The numbers drawn up by Bloomberg are a “levelised cost of energy” (LCOE) which takes into account financing, intermittency and other issues, so that different technologies can be fairly compared. However LCOE does not account for the cost of managing intermittent power in the national grid electricity system.

The figures are assessed in dollars to allow international comparisons, however the figures are influenced by a range of costs including currency exchange rates. Fossil fuel technologies have been increasing in cost, partly due to new estimates on likely higher future carbon prices.

Henbest says the LCOE figures are the kind that would help power companies trying to make a decision on whether to build a new windfarm, a solar array or a gas-fired power station.

The analysis comes at a time when the Conservative government has taken the axe to onshore wind subsidies and pruned back drastically some of those available for solar systems and biomass plants.

Greenpeace said the latest results showed that ministers were “backing the wrong horse” by giving strong support for new nuclear plants at a time when subsidies to renewables were being hacked back.

Doug Parr, chief scientist at Greenpeace, said: “This is yet another major breakthrough for clean technologies that just go on smashing new records on efficiency and prices. As the production costs of coal, gas, and nuclear power keep rising and those of wind and solar falling, it’s blindingly obvious that the UK government are backing the wrong horses. Millions of British consumers will pay for this mistake with higher bills to subsidise costly, outdated and polluting power sources.”

The environmental group recently produced its own report which asrgued that with the right support the UK could be producing 85% of its own renewable electrcity by 2030.

A Department of Energy and Climate Change spokesman said: “Government support has driven down the cost of renewable energy significantly, enabling renewables to compete with other technologies and helping the industry stand on its own two feet.

“Our priority is now to move towards a low-carbon economy whilst ensuring subsidies are used where they are needed most, to provide the best value for money for hardworking bill payers.”