A well-known consulting firm says wind and solar capacity could replace the need for additional nuclear power in the UK, but some form of support for them will probably still be needed.
Findings from Cornwall Insight’s Benchmark Power Curve – a comprehensive market and asset-level power price modelling service – show that meeting UK’s fourth and fifth carbon budgets without commissioning new nuclear capacity is a real possibility.
Not only this, but the forecasts predict that meeting these targets can be achieved at a lower cost compared to developing a new fleet of reactors.
Cornwall Insight head of new business Ben Hall said, “This latest forecast from Cornwall Insight marks a notable shift away from previous thinking that nuclear generation and newbuild plants are a crucial step towards meeting our carbon targets.
“Continual improvements to the development and operation of renewable technologies such as wind and solar see them become increasingly cost-effective, allowing the UK to meet its targets without the need for additional new nuclear capacity.”
However, Mr Hall said that despite the falling costs of solar PV, onshore and offshore wind and other low-carbon technologies, deployment may still need some form of support above and beyond the power markets.
“Captured wholesale prices for renewable projects will fall relative to baseload prices, leading to lower revenues because of what is commonly termed power price cannibalisation,” he explained. “From our modelling it is also evident that the combination of capacity market derating factors for renewables and projected clearing prices – even if they rise – is not going to be enough to encourage significant newbuild merchant renewables.”
Mr Hall said Cornwall Insight’s analysis also raises questions about operating wider, traditional, thermal, baseload plant, with Benchmark Power Curve modelling showing that in some scenarios there will be minimal additional combined cycle gas turbine deployment, with any newbuilds generally replacing older units rather than being additive.
“There is likely to be a shift in non-renewable generation to being provided by interconnectors, reciprocating engines and open cycle gas turbines,” he concluded. “To drive this new capacity an increase in the capacity market price will emerge.”