By Cameron Wilson, Strategy Analyst
In June 2022, Renewable UK released Roadmap to net zero: a manifesto for a fully decarbonised power system by 2035. This report provides both short and long-term recommendations that the UK government should follow in order to achieve full decarbonisation of power generation in the next 13 years.
Recommendations are split across six key areas: critical pathway to a zero-emission power system, reforming markets to drive low carbon investment, creating a net zero network, accelerating renewable deployment, a green hydrogen revolution, and maximising the economic opportunity.
As far as the recommendations put forward are concerned, the most pressing supply-side issues are covered with suitable solutions given for each, whereas, demand-side actions which will ease the transition to a net zero carbon power supply were not given a great deal of prominence .
In this blog, I will dive into each of the six key areas and provide my insight on how accurate the roadmap is and if there is anything else that should be considered.
Of the anticipated 460TWh of annual electricity demand in 2035, over 70% of this will need to be met via renewable sources such as wind and solar. Overall electricity demand is also set to increase 40-60% due to the electrification of sectors such as transport and heating.
With set targets in place for offshore wind capacity, namely 50GW by 2030 as per the Energy Security Strategy, flexibility technologies will be crucial in integrating such capacity while mitigating periods of mismatch between supply and demand. The main flexibility technologies which we have at our disposal are energy storage, demand-side response, and interconnectors.
While mention is given to current strategic barriers to deployment of energy storage, there is little detail given about what these barriers are, such as the need to define energy storage as a distinct subset of generation in primary legislation [1].
The roadmap also notes the need for demand-side response which includes smart charging of electric vehicles, but it is not specified what is required to enable this. Actions here would include electricity market reform that enables time-of-use and feed-in tariffs which would allow consumers to consume and supply power to and from the grid at times where it is economically beneficial.
However, I believe that where specific policy-based solutions are missing, the roadmap’s long-term recommendations for government to regularly update the Smart Systems & Flexibility plan will be effective in paving a path which achieves fast-paced decarbonisation with a strong degree of system flexibility.
In this section, the need to develop flexibility markets and the actions required to bring them into effect are described in detail. The benefits of robust flexibility markets are presented, with savings of up to £16.7bn a year in 2050 if appropriate approaches are implemented.
However, concerns are raised about the lack of less established, non-wind technologies which are awarded a contract for difference (CfD) at competitive auctions. So far, only two non-wind projects from Pot 2 have been delivered to date. From here the roadmap suggests that it may be time to consider a different model of allocation for less developed generation assets.
One example that comes to mind in the case of CfD allocation rounds is if measures such as ringfencing for tidal stream in Allocation Round 4 (AR4) fail to support final project delivery or accelerated cost reduction, then the argument for different allocation model for less developed non-wind technologies is certainly a compelling one.
Moving back to flexibility markets, it is recommended to use elements of carbon pricing to create market signals that support investment in low-carbon flexibility and balancing services. With this also comes the recommendation within the roadmap to provide funding for novel types of long duration energy storage, that of which will be crucial in removing geographical limitations suffered by current forms of large scale energy storage such as pumped hydro.
When such large quantities of offshore wind are brought onto the UK grid over a relatively short period of time, transmission infrastructure will need to be managed and operated sufficiently to avoid delays in the connection of further offshore wind capacity.
In my opinion, the roadmap does well in explaining the urgent need to update the current approach to network management which has traditionally focused on making incremental changes to a fossil fuel based system. A long-term approach that addresses the scale of planning and investment involved is paramount to minimising costs and maximising the rate at which new offshore wind capacity can be installed. Failure to take an optimal approach will require greater amounts of new transmission infrastructure to be built, increasing costs for consumers out to 2050.
Despite acknowledging the importance of long-term network management, an area which isn’t covered in the report is the importance of taking approaches that minimise end consumption at the domestic, commercial, and industrial level. This will play a huge part in reducing the required grid investment over the coming decades.
Although the roadmap is focused on supply-side issues from the perspective of power production, the scale of the challenge and the costs associated with decarbonising this sector is heavily linked to what happens on the demand-side.
For example, failure to optimise energy efficiency when decarbonising heat demand alone could be £6.2 billion higher per year up to 2050 from the additional requirements in generation capacity and grid infrastructure [2]. This emphasises the importance of measures such as improved insulation and construction standards of domestic and commercial buildings.
At present several barriers stand in the way of offshore wind deployment reaching the pace required to achieve 50GW by 2030 while decarbonising the wider energy system by 2035. As part of the Energy Security Strategy, the UK government aims to reduce average consenting times from four years to one, with prominent industry leaders saying that the delivery of 2030 installation targets are impossible without such measures being put in place [3].
The roadmap gives mention to non-market barriers such as the interference of defence radar systems that can be caused by extensive offshore wind development, and how a strategy needs to be developed alongside the Crown Estate, Crown Estate Scotland and the Electricity System Operator that maximises deployment by giving developers and investors maximum visibility on the availability of the seabed in the coming years in future leasing rounds.
Finally, the roadmap places responsibility on government to be the driving force behind trade-offs which prioritise who gets to use what areas of the seabed for particular purposes. It is emphasised again that this should maximise deployment while satisfying other users of the sea such as fisheries.
The recommendations put forward in this section of the roadmap cover many of the necessary actions required to accelerate deployment. Certainty is key for developers and investors, while the consenting process needs to adapt to ensure trade-offs between government policy, public interest, environmental impact, and disruption to other seabed users can be resolved in a far shorter timescale.
Equally, future CfD auctions need to ensure that developers and operators can maximise certainty for Government and the Crown Estate/Crown Estate Scotland with regards to their supply chain commitments.
However, I believe a consideration which could have been outlined more clearly is the issue of whether or not CfD is the best mechanism to deliver the sheer quantity of offshore wind capacity required out to 2030 and beyond. Industry leaders have praised CfD and its role in driving down costs considerably over the past decade, but some argue that when project scale and pace of deployment take priority over further cost reductions, another form of auction mechanism should be considered [4].
Hydrogen is praised for having the potential to provide grid balancing services, seasonal storage, curtailment reduction and reduced reliance on gas peaking plants. As such, adequate policy is crucial in deploying significant hydrogen capacity by 2035, particularly green hydrogen, which is set to become the lowest cost option in many instances in the near future (the point at which this occurs will heavily depend on the trajectory of wholesale gas prices).
With the British Energy Security Strategy aiming to have at least 5GW of green hydrogen capacity by 2030, the roadmap puts forward suitable recommendations to develop hydrogen markets, initiate R&D which improves electrolyser performance, and remove regulatory barriers which slow or prevent green hydrogen deployment.
Additionally, to bring forward the crossover point at which green hydrogen becomes the most cost competitive form of hydrogen, the roadmap also suggested to put into place hydrogen obligations for industrial users, something which would prove effective in decarbonising the operations of major greenhouse gas emitters such as oil refineries. Of the six oil refineries in UK, five intend to decarbonise their on-site hydrogen production. However, only the Humber refinery plans to switch to green hydrogen via its 100MW wind-powered Gigastack project in collaboration with Orsted [5].
By incentivising green hydrogen usage as part of wider hydrogen obligations for industrial users, this would go some way in reducing carbon intensities currently seen in a range of heavy industries.
The final section of the roadmap focuses on what will be needed to create the technological, infrastructural, and human resources to maximise the economic gains that can be attained through a net zero energy transition.
As well as maximising gains, focus is given on distributing these gains nationwide and achieving a just transition. To capitalise on technical capabilities going forward, it is advocated to put offshore wind R&D funding to levels similar to that of oil & gas and aerospace. To attract inward investment to existing ports and increase their capabilities and competitiveness with ports abroad, it is advised that a free ports approach should be taken, where tax reliefs can be used to foster innovation and trade support. For putting in place the necessary human resources, it is suggested to review current educational framework for secondary and further education so that courses and training programmes can be developed which produce the number of professionals and skilled technicians required to aid such a large transitional undertaking.
Despite these recommendations being appropriate for maximising economic opportunity, additional measures can also be taken, especially when considering the notion of a just transition. Again, the reduction of end energy use through improved insulation and energy efficiency has been ignored, with such measures not only supporting a predominantly intermittent power system meet inflexible seasonal heating loads, but also in aiding the reduction of fuel poverty, that of which is only set to worsen with the sharp increase of wholesale gas and electricity prices.
Further measures to compliment a net zero power system while increasing security of supply is increased interconnector capacity. With the UK’s European counterparts sharing similar aspirations of power system decarbonisation, and with such decarbonisation increasing periods of mismatch between supply and demand, increased interconnector availability will benefit all nations connected to a wider European “supergrid”. This “supergrid” can play a part in not only lowering energy costs but giving the UK greater avenues to become a net exporter of electricity [6].
On the whole the roadmap produced by Renewable UK puts forward a suite of effective measures on the supply-side, both technical and policy based, that will aid in the UK power system in reaching net zero by 2035.
However, as mentioned throughout my blog, demand-side considerations that would complement such a net zero power system could have been given a lot more prominence in the roadmap.
Another area which is in need of further examination is how to treat gas plants that have been successful in the most recent capacity market auctions, with several of these plants having no incentive to abate emissions in their power generation. This area requires some form of policy intervention, especially when it is known that several awarded capacity market contracts run until 2040. This goes against decarbonisation ambitions unless the gas plants in discussion become carbon capture and storage (CCS) or hydrogen ready in time for 2035 [7]. New plant over 300MW is already required prove that it is capable of being retrofitted to accommodate CCS [8].
However, the three new gas plants that were successful in the most recent capacity market auction have power outputs below 300MW. Action is needed to remove the current 300MW threshold so that smaller gas plants with scheduled operation beyond 2035 can play a role in achieving a net zero energy system. Overall, the Roadmap to net zero: a manifesto for a fully decarbonised power system by 2035 offers an excellent guideline to the role of offshore renewables in the run up to 2035 and is one that I will be following closely over the coming years to see how it all plays out.
| [1] Department for Business, Energy & Industrial Strategy, “Transitioning to a net zero energy system: Smart Systems and Flexibility Plan 2021,” Crown copyright, 2021. [Online]. Available: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1003778/smart-systems-and-flexibility-plan-2021.pdf . |
| [2] “Energy efficiency: building towards net zero,” House of Commons, 2019. [Online]. Available: https://publications.parliament.uk/pa/cm201719/cmselect/cmbeis/1730/1730.pdf . |
| [3] A. Lee, “‘If nothing changes we can’t deliver’: Iberdrola warns quicker consent key to new UK offshore wind goal,” Recharge News, 2022. [Online]. Available: https://www.rechargenews.com/wind/if-nothing-changes-we-cant-deliver-iberdrola-warns-quicker-consent-key-to-new-uk-offshore-wind-goal/2-1-1198460 . |
| [4] A. Lee, “‘Not cheaper – more’ – Orsted veteran Sykes on why the game’s changed for UK offshore wind,” Recharge News, 2022. [Online]. Available: https://www.rechargenews.com/wind/not-cheaper-more-orsted-veteran-sykes-on-why-the-games-changed-for-uk-offshore-wind/2-1-1249331. |
| [5] “Low-carbon hydrogen gathers pace in UK refineries,” Argus Media group, 2022. [Online]. Available: https://www.argusmedia.com/en/news/2304469-lowcarbon-hydrogen-gathers-pace-in-uk-refineries. |
| [6] “A European Supergrid,” House of Commons, 2011. [Online]. Available: https://publications.parliament.uk/pa/cm201012/cmselect/cmenergy/1040/1040.pdf. |
| [7] G. Alster, “UK spent £350m on new gas power despite nearing fossil phase-out,” Ember, 2021. [Online]. Available: https://ember-climate.org/insights/commentary/uk-spent-350m-on-new-gas-power-despite-nearing-fossil-phase-out/. |
| [8] Department for Business, Energy & Industrial Strategy, Welsh Government, “Decarbonisation Readiness: Joint call for evidence on the expansion of the 2009 Carbon Capture Readiness requirements,” Crown copyright, 2021. [Online]. Available: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1001949/decarbonisation-readiness-call-for-evidence.pdf. |