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Ministers must seize ‘golden opportunity’ to switch to low cost energy

Tue 10 Jul 2018 by David Foxwell

Ministers must seize ‘golden opportunity’ to switch to low cost energy
The NIC would like to see renewable energy sources such as wind and solar provide at least half the UK’s generating capacity by 2030

Britain has a ‘golden opportunity’ to switch to greener ways of providing energy to homes and businesses without increasing bills – but only if ministers act now to make the most of it.

That conclusion is a key finding in the National Infrastructure Assessment – the first ever for the UK – published by the National Infrastructure Commission.

Chairman Sir John Armitt said it has long been assumed that a switch to greener sources for the country’s energy needs would mean a hit on people’s pockets – but analysis for the Commission shows this would not necessarily be the case.

In fact, making this switch towards low-carbon and renewable sources for both the country’s power and heating, combined with a move towards electric vehicles, would mean the customer of 2050 would pay the same in real terms for their energy as today.

But he warned this will only be possible if the right decisions are taken now by government. These include continuing to invest in low cost renewable technologies, such as wind and solar, so that these provide at least half the country’s generating capacity by 2030, as well as ramping up efforts to improve the energy efficiency of the UK’s buildings and enabling a rapid switch to electric vehicles. The National Infrastructure Assessment also warns that the government will need to take steps to find low-carbon alternatives to oil and gas for heating homes and businesses.

Ten years ago, it seemed almost impossible for the UK to move towards being powered mainly by renewable energy sources such as solar and wind power in an affordable and secure way.

Sir John said “Where the UK’s energy comes from will need to change radically over the coming decades if the UK is to meet its legally-binding climate change targets.

“If we act now we have a golden opportunity to make our country greener and protect the money in the pockets of consumers long into the future – something few of us expected to be able to do.

“Ministers can seize this chance by investing in renewables and other low-carbon technologies, so they become the main players in our energy system – something that was considered a pipedream as little as a decade ago. But they need to act now to realise the full potential of what can be achieved.”

The National Infrastructure Assessment said that, currently, around 30 per cent of the UK’s electricity comes from renewable sources like wind and solar power – up from 12% only five years ago. It recommends that the government take steps to push this even further and ensures that a minimum of 50 per cent of electricity comes from renewables in 2030.

In the longer term, an energy system based on low cost renewables and the technologies required to balance them may prove cheaper than building further nuclear plants, as the cost of these technologies is far more likely to fall, and at a faster rate.

The National Infrastructure Assessment cautions against a rush to agree government support for multiple new nuclear power stations and proposes that after Hinkley Point C in Somerset the Government should agree support for only one more nuclear plant before 2025. This would give flexibility to move towards newer low-carbon energy sources in future, while at the same time maintaining the UK’s nuclear supply chain and skills base.

The National Infrastructure Assessment is clear that the switch to greener energy won’t happen overnight – and in the next decade, the UK may also want to continue to use sources of natural gas for power. It also highlights the need to ensure the current pipeline of interconnectors, linking the UK to energy supply from abroad, is not affected by Britain’s leaving the European Union, and to aim for continuity with Euratom arrangements to enable the nuclear industry to continue operating after 29 March 2019.

However, it finds that moving to an electricity system mainly powered by renewable energy sources could be the “safest bet” in the long term and become the lowest cost outcome for consumers.

The National Infrastructure Assessment therefore recommends that established technologies like wind and solar power be allowed to compete to deliver the overwhelming majority of the extra renewable electricity needed as overall demand increases, with measures to move them to the front of the queue for Government support.

It also recommends that the government sets out a clear pipeline, with dates and budgets, for future auctions to support renewables.

“The whole purpose of the UK’s first-ever National Infrastructure Assessment is to think beyond the technologies of today and to ensure we can make the most of future innovations.  It’s why it’s not just a one-off but something we will be repeating every five years to ensure we remain on the front foot.

“This is not some unaffordable wish-list of projects: it sets a clear direction for how to meet the country’s future infrastructure needs and makes a realistic assessment of what can and should be delivered within the stated aim of Ministers for steady and continued investment over the coming years. I therefore look forward to the Government’s response to our report and seeing how our recommendations can become reality.”

National Infrastructure Assessment energy recommendations

The Commission recommends that government should set out a pipeline of pot 1 Contracts for Difference auctions, to deliver at least 50 per cent renewable generation by 2030, as part of the transition to a highly renewable generation mix.

Government should move technologies that have recently become cost competitive, such as offshore wind, to pot 1 following the next Contracts for Difference auction in Spring 2019.

Pot 1 should be used for the overwhelming majority of the increase in renewable capacity required.

The assessment also recommends that the government should publish indicative auction dates and budgets for the next decade by 2020 and over time take whole systems costs into account in Contracts for Difference auctions, as far as possible.

It also recommends that the government consider whether there is a case for a small-scale, pot 2 auction in the 2020s, if there are technologies which are serious contenders for future pot 1 auctions and that it should not agree support for more than one nuclear power station beyond Hinkley Point C, before 2025.

The NIC further recommended that the government establishes the safety case for using hydrogen (which can be produced using renewable energy) from as a replacement for natural gas, followed by trialling hydrogen at community scale by 2021 and that subject to the success of trials, launching a trial to supply hydrogen to at least 10,000 homes by 2023, including hydrogen production with carbon capture and storage.

 

 

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