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DECC Reviews Renewables

By Dave Elliott

In its 2014 review of renewable energy policy, part of its Electricity Market Reform deployment exercise, the UK Department of Energy and Climate Change outlined how it saw each key option developing: http://www.gov.uk/government/news/ensuring-value-for-money-and-maintaining-investment-in-renewable-energy
There have certainly been some changes since its 2011 Renewable Roadmap, which selected eight technologies as likely to be key to meeting the UK’s 2020 renewables targets. www.decc.gov.uk/en/content/cms/meeting_energy/renewable_ener/re_roadmap/re_roadmap.aspx
PV solar was not amongst the selected eight. But now it’s a front runner. In its new report DECC says, ‘We consider solar PV now to be an established technology in the UK,’ and with 2.7GW or more in place that’s clearly true. And they add ‘Solar is anticipated to be the first large-scale renewable technology to be able to deploy without financial support at some point in the mid-to-late 2020s’. Didn’t it do well! Despite the cuts in Feed In Tariffs. DECCs main concern now seem to be that PV, especially solar farms, will expand too fast! They note that ‘Solar PV is a technology which can be deployed quickly even at large scale’. But they are worried about the costs and eco-impacts of large ground mounted projects and would prefer Building Integrated schemes, large and small. On costs, they accept that these are falling (which is why take-up has grown) and will continue to fall (in part due to the take-up), but they say ‘because the UK is a small part of the global market, it is likely that these cost reductions will largely occur independently of what the UK does’. And they have sought to limit the cost pass-through to consumers, most notably by entirely cutting Renewables Obligation (RO) support for large projects. Otherwise they say they might reach 5GW by 2020! Nevertheless they still talk of an overall possible 10GW of PV by 2020 and perhaps even 20 GW.

Wind power did feature strongly in the 2011 DECC review, offshore especially. Now, despite being the cheapest of the main new renewables, on land-wind has fallen out of favour in some circles (e.g.due to vociferous campaigning and some local opposition), although, as DECC says, ‘current installed capacity in the UK is 7.3GW, with a further 1.5GW under construction’ and ‘there is also a large potential pipeline of UK projects with 5.4 GW having received planning consent and a further 6.5GW currently in the planning system. This means we are well on our way to reaching our ambition for 11-13GW of onshore wind by 2020’. But by contrast offshore wind is seen the biggie: ‘Offshore wind is the most scalable of the renewable technologies, and it is the renewable technology that has the most potential to make a significant contribution to decarbonisation goals, if required. There is significant long-term potential for cost reduction and it is at an early stage of deployment – DECC’s central estimate is a 25-30% reduction in central costs by 2030, which could be higher depending on the level of deployment between now and then. The UK is the market leader for offshore wind, with the biggest pipeline to 2020, and deployment in the UK is therefore a key driver of cost reduction to 2020’. DECC had earlier said up to 39GW was possible by 2030. But that depended on the market. www.gov.uk/government/consultations/transition-from-the-renewables-obligation-to-contracts-for-difference

Wave and tidal stream also featured in DECC’s 2011 Renewable Energy Roadmap, which suggested that there could be 200-300 MW of marine capacity by 2020. That was much less than the 1-2 GW forecast in the Government’s Marine Energy Action Plan 2010, or even the 1.3GW by 2020 UK figure in the EU Renewable Energy Action Plan. And although the UK is still in the lead in this area, the new DECC Review reduces its expectations further: ‘Wave and tidal stream technologies are still at the demonstration stage and are not currently competing in the mainstream market. There are currently around c.10MW of wave and tidal stream capacity deployed in sea trial around the UK – more than the rest of the world combined. We anticipate that by 2020, wave and tidal stream could reach 100-150MW in the UK alone. This deployment could then increase quickly beyond 2020 to reach GW-levels in the late 2020s-early 2030s’.

Unlike heat pumps (still strongly backed), geothermal wasn’t in DECCs 2011 key options list, but a 2012 SKM study claimed that it could supply 20% of UK electricity from around 9.5GW of capacity. The new DECC review however relies on a 2013 Atkins report on deep geothermal power which suggested a possible best case potential of up to 3-4% of current average UK electricity demand. So it’s still seen as something of an outsider option, although worth backing.

By contrast, DECC is still very enamored of biomass, including EfW combustion, advanced gasification/pyrolysis, biomass CHP and AD from farm and other wastes. There are limits though, mainly related to land use constraints and concerns about the sustainability of importing biomass pellets for large biomass conversion plants. I’ll be looking at that in my next but one post.

The new DECC renewables review is just about electricity supplies, so it doesn’t look at solar or biomass heat (both being pushed quite hard by the Renewable Heat Incentive), or biofuels (on which progress is less spectacular). But arguably it does add up to a package might help the UK meet it 2020 15% renewable energy target. However, with the various cuts and uncertainties about the effects of the new Contracts for a Difference support system, that is not certain: DECC has just imposed a £205m p.a. cap on renewable CfD allocations up to 2020 which may constrain new offshore wind and large PV solar projects seriously. https://www.gov.uk/government/news/over-200-million-boost-for-renewables I will be looking at that in my next post. And beyond 2020 there are no renewables targets, with, under current policies, the continued expansion of renewables likely to be constrained by the commitment to nuclear and maybe shale gas CCS. But policies can change and with renewables costs falling, they may break through further and accelerate more, so there is still all to play for.

If so, what about grid balancing? DECC has confirmed that it will be seeking 53GW of contracted capacity for the new ‘capacity market’ for 2018/19, to help deal with supply shortfalls due to demand peaks, variable renewable inputs and plant or grid failures. For the moment much of this will involve existing gas plants that might otherwise be closed, given the increased output from renewables, but will be needed occasionally when that output is low. However any facility that can provide grid balancing services can apply to the capacity auction process in December, including storage and demand management. Contracted capacity will get a cash incentive for being available. DECC says it will add £2p to average annual consumer bills over the period 2014-30. https://www.gov.uk/government/news/britains-energy-security-strategy-now-fully-in-place

So what next? Given its excellent renewable resources, clearly in principle the UK could, if it wanted to, at least match the German ambition of getting 80% of electricity from renewables by 2050. Assuming that is Scotland, which has most of the resources, is still part of the UK! Carboncommentary.com noted that about 15 GW of 2020 renewables will be in Scotland or in Scottish waters. Only about 18 GW will be in England and Wales. So it said Independence would mean around 40% of total UK renewables capacity would disappear, but only 10% of UK electricity consumption. www.carboncommentary.com/2014/04/

DECC sees it differently, arguing that Scotland’s small population would not be able to sustain the cost of its large renewables capacity without the RO income from the rest of the UK – or a £189 p.a increase on Scottish consumer’s bills. But in reality wouldn’t the UK have to buy in, and continue to support, Scottish green power to meet it renewable targets? DECC also sees the nuclear issue differently, and, with the European Commission currently looking at the UK’s proposals for funding the EdF Hinkley project, Westminster has evidently warned the (anti nuclear) Scottish government that any negative representation it made to Brussels on this would be viewed as a ‘hostile act’. www.heraldscotland.com/politics/wider-political-news/minister-sought-to-dissuade-msp-from-role-in-eu-inquiry-inquiry.23914772
Clearly the independence referendum is going to be a lively affair!

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