Long-awaited plans on coal and renewables published

9th November 2016

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Neil MacGillivray

Industry and campaign groups welcomed government proposals to phase out coal and provide £290m for renewable energy auctions.

The government announced plans to wind down coal-fired power stations by 2025 a year ago. Today it set out how it would do this in a consultation. Modelling conducted by the Department for Business, Energy and Industrial Strategy (BEIS) has concluded that the move would not pose any risk to the UK’s energy security, a key condition of the planned phase-out.

Coal plants will be allowed to continue to operate after 2025 if they significantly reduce emissions to levels that are consistent with the UK’s decarbonisation commitments, the consultation document said. This could entail applying the regime for new coal power stations, which stipulates use of measures such as carbon capture and storage technology, to existing plants from 2025, BEIS suggested.

The other option being considered is to apply a limit per unit of electricity generated. Both choices would reduce emissions to at or below those of newly constructed gas-fired power stations, BEIS said.

The department is also considering how to constrain the operation of coal-fired power stations in the years leading up to 2025 to ensure a smooth transition to closure. Constraints could apply either to individual plants or across the remaining fleet of coal stations, and could be implemented by limiting running hours or CO2 emissions.

Electricity generated from coal power stations in the UK has plummeted, accounting for just 9% of UK power in 2016 to date, down from 27% and 43% in corresponding periods in 2015 and 2012, according to experts at the Energy and Climate Intelligence Unit.

Richard Warren, senior energy policy adviser at manufacturing body EEF, said: ‘Given the uncertainty over the last 18 months caused by policy chops and changes, delays in investment decisions and significant political change, industry has been crying out for some certainty and sense of direction.’

The consultation starts to provide some answers but a comprehensive strategy needs to lead from it, including better contingency plans to ensure security of supply, he added.

Michael Grubb, professor of international energy and climate change policy at University College London, said that proposals outlined in the consultation would accelerate investment and improve investor confidence.

‘Outlining how and when coal plants will cease to operate will pave the way for new investment, including gas. Coal is already struggling economically and removing coal clarifies the market space for gas during the 2020s,’ he said.

Friends of the Earth welcomed the proposals but added that the government needed to ensure the planning application for a new opencast coal mine in Northumberland, which is subject to public inquiry, is turned down. ‘If we don’t burn coal, we won’t need to dig it up,’ the organisation’s climate change campaigner Guy Shrubsole said.

The government also outlined details for the April 2017 auction under its Contract for Difference funding mechanism. A total of £290m will be available each year for projects to be delivered in 2021/22 and 2022/23.

The money is to support less established technologies, which the government has defined as offshore wind; advanced conversion technologies and anaerobic digestion (with or without combined heat and power (CHP)); dedicated biomass with CHP; wave and tidal stream; and geothermal.

The Renewable Energy Association (REA) criticised the exclusion of some technologies from the auction. Support for advanced energy-from-waste and biomass CHP is significantly capped in capacity terms while the government undertakes a review, the trade body pointed out.

There is also no dedicated capacity set aside for marine technologies, which was the case in the last auction. These limitations could constrain the industry’s efforts to drive next-generation energy systems such as gasification and tidal energy into the mainstream, the REA said.

James Court, the association’s head of policy and external affairs, said it was frustrating that the cheapest technologies such as onshore wind and solar, were again blocked from the auction: ‘We need the government to take further action to bring balance to the market because the current situation sees gas, nuclear and even diesel all get financial support while the lowest cost renewables are blocked to market.

‘There is also no support again for biomass conversion, which is a pragmatic way of putting the coal plants we are decommissioning to good use,’ he said.

The Scottish renewables sector said it was ‘bitterly disappointed’ that onshore wind energy projects on remote islands had not been allowed access to the auction. More than 800MW of consented wind projects were effectively blocked due to very high grid connection costs, according to trade body Scottish Renewables.

The UK government has issued another consultation on the issue, which has been under discussion for several years.

A further document published today by the government predicts that by 2025, onshore wind and solar will be the cheapest form of new power generation by some margin.


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