The UK Must Invest £215bn by 2030 to Decarbonise

The UK Must Invest £215bn by 2030 to Decarbonise

  • 15 Sep 0

The UK will need to invest a staggering £215bn in its energy system by 2030 in order to replace aging assets and decarbonise. As the country undergoes a complete energy overhaul, nearly half of this amount (£95bn) will need to be spent on disruptive technologies such as renewables, battery storage and distributed generation.

With security of supply already causing major concern, it has been reported that the UK faces the obsolescence of approximately 40% of its current aged combined cycle gas turbine fleet by 2020 and approximately 70% of all reliable generation capacity by 2030.

In addition to losing 15GW of coal capacity as part of the pledged phase out by 2025, by 2030 the UK is also expected to lose:

  • 7.7GW of the current 8.9GW of operational nuclear capacity;
  • 22GW of gas generation capacity, 13GW of it by 2020; and
  • 2.3GW of biomass conversion capacity due to the end of government subsidies in 2027.

The need to shore up the UK’s tenuous electricity security of supply in the face of this mass obsolescence of base load generation capacity, combined with government policy to achieve a 57% reduction in greenhouse gas emissions by 2032, only be achieved with substantial investment.

The estimates are based on an average of National Grid’s four ‘Future Energy Scenarios’ published in July 2016. This average scenario sees a 5% (16TWh) increase in annual energy demand, due to increases in demand from electric vehicles and the electrification of heating.

Securing sufficient investment will require the Government to implement transparent, stable and supportive policies. The wholesale price and load factor uncertainty resulting from further renewables capacity growth means that the vast majority of the UK’s required new generation capacity investment will not materialise without a subsidy or other high confidence revenue stream.  

Whilst both the contracts for difference and capacity market mechanisms are often recognised as providing some reassurance, other policies such as the levy control framework seem unable to cope with changing market conditions and require both adjustment and increased transparency. It is widely recognised that the current policy portfolio will be insufficient to meet the target of reducing emissions by 57% on 1990 levels during the fifth carbon budget (2028-2032) and action needs to be taken by the Government to address this.


Leave A Comment


Categories

  Latest Tweets