The low-carbon sector has called for the government to clarify its policy on renewables after climate change advisors said that onshore wind and solar could be subsidy-free by 2020.
The Committee on Climate Change (CCC) today outlined scenarios for the power sector ahead of publication at the end of next month of its advice to government for the fifth carbon budget. The budget will set the maximum level of domestic emissions between 2028 and 2032, working towards the UK's commitment to reduce emissions by at least 80% by 2050 compared with 1990.
Investments to 2020 are largely committed already, and will reduce power sector carbon intensity from around 450 g/CO2/kWh to around 200-250 g/CO2/kWh, the committee said. It estimates that up to 200TWh of new investment in power generation will be needed post-2020 to replace retiring coal and nuclear power stations and to meet increases in energy demand.
Onshore wind and ground-mounted solar are likely to be subsidy-free in the first half of the next decade, and nuclear and offshore wind sometime between 2025 and 2030, the CCC said. This prediction is based on gas generation facing the full costs of its carbon emissions and takes into account the costs of integrating intermittent power from wind and solar generators. The committee looked at the system costs of integrating large amounts of intermittent, variable and inflexible generation, and found that different combinations of technologies are capable of providing a secure supply as long as flexibility is increased. This could be achieved through demand-response technologies and international interconnection, it said.
However, the committee pointed out that the government had yet to act on its recommendation earlier this to extend the levy control framework (LCF) to 2025. The LCF sets a cap on the amount of government subsidy provided to low-carbon energy. "This remains an urgent priority," the report states.
Since it came into power in May, the government has cut financial support for renewables, arguing that subsidies were adding too much to consumer bills. In July, energy and climate change secretary Amber Rudd told MPs on the energy and climate select committee that onshore wind was unlikely to be included in the next round of auctions for energy contracts. It has still not set out its final position on this.
Speaking at an meeting of the All Party Parliamentary Climate Change Group last week, CCC chair Lord Deben said: "We need to know if the LCF is to be extended and to what level. This is vital for investors."
Gordon MacDougall, managing director of British Wind, a partnership of independent energy generators, said that it was vital that onshore wind continues to be able to compete for long-term contracts. "The report highlights that the onshore wind industry is one step away from being competitive with gas when looking at long-term costs," he said.
Maf Smith, deputy chief executive of trade body Renewable UK, highlighted the CCC's finding that onshore wind was one of the best-value options of all energy sources, and that offshore wind costs have plummeted.
"But the committee makes it clear that this success story can't continue without a clear plan from government setting out how it will support the expansion of low-carbon energy in the next decade," he said.
The government's plans only extend to 2020, which is a short time away in terms of making energy policy, he added.
Niall Stuart, chief executive at the trade body Scottish Renewables, also called on ministers to set out their ambitions for renewables.
Nick Molho, executive director of the Aldersgate Group, said: "The low carbon sector is now at a crossroads, with urgent clarity needed in particular on the funds available to support investment in low carbon power stations in the 2020s."
