UK Boosts Efforts To Drive Renewables Investment

Record-high wind and solar generation raised the share of renewable electricity in the UK last year, and the UK and Scottish governments are looking to further boost renewables and drive investment in green energy projects including carbon capture and storage (CCS) and green hydrogen.

The UK government also explores a major reform to the flagship renewables scheme to improve energy security and drive investment, while Ofgem is looking to reform local energy systems with the aim to establish a more decentralised, decarbonised, and dynamic energy system in Great Britain.

Record Renewable Power Generation Production from renewable technologies in 2022 broadly matched the previous record high of 2020 and renewables share of electricity generation increased to 41.4% from 39.6% in 2021, largely due to wind and solar generation reaching new record highs, the Department for Energy Security and Net Zero said in its latest statistical release, Energy Trends, at the end of March 2023. Wind generation hit a record high share of 24.6% of generation last year. Generation from fossil fuels fell slightly, down to a share of 40.8%, but generation from gas remained the principal form of UK generation at 38.4%, according to the government data.

Records in renewable generation were achieved in 2022 for both onshore and offshore wind, as well as solar PV. Where the previous 2020 record for renewable generation was driven by favourable weather conditions, the 2022 record was driven primarily by new capacity, especially in offshore wind, the report said. Compared to 2021, renewables generation was 10.4% higher; although weather conditions weren’t as favourable as in 2020, wind speeds and sun hours were higher than in 2021.

Most notable was the spike in new capacity installation in the first quarter of 2022 when 1.5 GW was installed in offshore wind alone. New offshore wind continued to come on line in the second and third quarters before dropping off in the fourth quarter. For the year as a whole, 2.7 GW in offshore wind was installed, including key sites at Moray East (1.0 GW) and Seagreen (0.3 GW) in Scotland, as well as Hornsea Two in England (1.4 GW), according to the Energy Trends report.

Plan To Bolster Clean Energy Industries The UK outlined at the end of March steps to strengthen Britain’s long-term energy security and independence to help deliver a clean, prosperous future for the country. The plan is aimed at boosting the UK’s energy security and independence and reducing household bills for the long term while maintaining a world-leading position in achieving net-zero emissions by 2050.

The measures include a commitment to carbon capture usage and storage (CCUS) with £20 billion funding. The first projects will be announced to progress to the next stage of the negotiations to roll out the first carbon capture clusters in the industrial heartlands. The round for areas to apply for two additional future clusters has also been launched and there will be an opportunity for further projects to be added to the first two clusters.

The UK Government has set an ambition for 10 gigawatts (GW) of hydrogen production by 2030 – which could generate enough clean electricity to power all of London for a year. The government also looks to kick-start investment into the UK’s emerging floating offshore wind industry by launching a £160 million fund to support port infrastructure projects, securing the UK’s leadership in this new technology.

A £240 million Net Zero Hydrogen Fund will back the first tranche of new green hydrogen production projects, while the UK will also open the fifth round of the UK’s scheme to incentivise investment in renewable electricity, backed by a budget of £205 million. The government will also launch a new competition to select the best small modular reactor technologies for development by the autumn of 2023.

The UK pledged to reform the planning process to enable the building of more energy infrastructure, including solar power and offshore wind projects, more quickly. Investments in EV charging points and infrastructure, and heat pumps will also be supported by government funding.

Chancellor of the Exchequer Jeremy Hunt said, “Transforming our energy system is no longer just about tackling climate change, it is also a matter of national security. To protect ourselves from future price spikes, we need to accelerate the move to cleaner, cheaper, home-grown energy.”

Accelerating Offshore Wind Power Deployment The UK’s Offshore Wind Champion, Tim Pick, issued in April an independent report in which he made recommendations to accelerate the deployment of offshore wind farms in the UK.

The key recommendation in the report is that the UK needs to urgently upgrade the national grid for a world of high renewables penetration and widespread electrification of homes and businesses. “Grid connections are increasingly becoming the rate-limiting factor for our Offshore Wind deployment going forward,” Pick said in the report.

One particular area on which the government and the Devolved Administrations should focus their attention is in seizing Britain’s first-mover advantage in the development of the new floating offshore wind (FLOW) industry, he noted. To lead in this industry, the UK will need a strategy to support innovation, R&D, and industrialisation efforts as the technology transitions from bespoke demonstration projects to serial production and commercial scale deployment. Another key element of a floating offshore wind strategy should be catalysing investment in the large-scale world-class port infrastructure which will be vital to delivering projects and securing the largest possible share of supply chain jobs, growth, and know-how, the Offshore Wind Champion said.

“With bold, determined leadership we have a fantastic opportunity to lead the world in this technology, in the same way that Aberdeen has led the world in subsea Oil & Gas,” he noted. In further developing its offshore wind industry, the UK needs to maintain focus on the competitiveness of the UK’s offer to Offshore Wind investors, while also recognising that the costs of the electricity system are ultimately borne by consumers, Pick said.

Energy Reforms In mid-April, the UK government announced plans to explore a major reform to the government’s flagship renewables scheme, the Contracts for Difference (CfD). The reform could help drive further investment in renewable energy deployment and improve energy security.

Currently, CfD are awarded based on the bid price submitted by renewable energy generating stations, with the aim to increase deployment and ensure good value to electricity consumers and, over time, drive down costs. The government is now seeking evidence and views about reviewing applications not just on their ability to deliver low-cost renewable energy deployment, but also based on how much a renewable energy project contributes to the wider health of the renewable energy industry.

“These reforms could see applicants considering overall costs alongside other ‘non price factors’ - such as supply chain sustainability, addressing skills gaps, innovation and enabling system and grid flexibility and operability - when submitting their bids, which could help drive investment in the sector, grow the economy and boost the country’s energy security,” the government said. Ofgem, the electricity market regulator, launched in March a consultation on the next steps in establishing a more decentralised, decarbonised, and dynamic energy system in Great Britain.

Akshay Kaul, Interim Director of Infrastructure and Security of Supply, said,“We need a radical rethink of the energy system, markets and grid to establish a net zero power system by 2035 and net zero economy by 2050. The role of local communities will be critical. That’s why we’re suggesting ways to make Britain’s energy systems and markets participatory and transparent.”

Referring to the future of distributed flexibility, Kaul noted, “We are setting out plans for how we can standardise and open markets – specifically by creating an ambitious vision for distributed flexibility involving a common ‘digital energy infrastructure’ which will allow more communities, businesses and organisations to buy and sell surplus renewable electricity and services when and where they need it.”

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