As an island nation, the UK has always been well-placed to harness renewable technologies. However, prior to the adoption of mandatory targets through the EU Renewable Energy Directive in 2009, the UK’s transition to clean energy had proved sluggish. Since then, heavy subsidies for renewable technologies have enabled the UK’s renewable generation capacity to surge six-fold, supporting a decade of rapid growth in the share of the UK’s energy accounted for by renewables.
The COVID-19 (coronavirus) pandemic has further accelerated the contribution of renewables to UK electricity generation. Indeed, according to provisional data published by the Department for Business, Energy and Industrial Strategy (BEIS), renewables’ share of electricity generation overtook that of fossil fuels for the first time in 2020.
The UK’s reliance on renewables is expected to be further reinforced by plans set out by the government to pursue a green recovery from the pandemic in the coming years. This is expected to be key to achieving the legally binding target of net-zero emissions by 2050; however, questions remain over whether current levels of support will be sufficient for achieving a successful transition to a green electricity system.
Renewables on the rise
Recent growth in the contribution of renewables to the UK’s energy mix has been underpinned by significant expansion in the installed capacity of renewable generation assets, which has increased from approximately 8GW in 2009 to more than 48GW in 2020. Early investment in renewable technologies relied heavily on government subsidies and carbon pricing, as high costs and the intermittent nature of renewables limited the propensity of major power producers to move away from conventional energy sources.
However, a sustained and dramatic fall in the price of renewable technologies has lessened the reliance on subsidies during the latter part of the past five-year period, with renewables increasingly benefiting from cost advantages to displace fossil fuel energy. This has led to several of the largest electricity producers divesting their conventional generation assets, while a growing number of downstream suppliers have committed to the use of renewable electricity sources.
Despite a coronavirus-induced reduction in electricity consumption, renewable generation increased by 11% in 2020 according to BEIS.
This robust growth was supported by new-found cost advantages associated with renewables, as the National Grid has tended to focus output constraints on more expensive sources of electricity during periods of excess supply. Cost advantages associated with renewable electricity generation are expected to strengthen in the coming years, with government estimates noting a sustained fall in the cost of wind and solar technologies, in contrast with a rise in the cost of combined cycle gas turbines.
Charging ahead
As part of its proposed green recovery from the coronavirus pandemic, the government has set out plans to make the UK a world leader in clean energy.
Offshore wind, which generated 13% of the UK’s electricity in 2020 according to BEIS, is central to this plan, with the government hoping that by achieving its target of increasing offshore wind capacity to 40GW by 2030, offshore wind farms will be able to produce enough electricity to power every home in Britain.
Though it already boasts the largest offshore wind capacity globally, the UK will need to grow its offshore wind fleet four-fold to achieve its energy targets.
Such expansion in capacity will be key to the UK meeting its target of reducing greenhouse gas emissions by at least 68% by 2030 compared with 1990 levels, which will require 87% of electricity to come from nuclear or renewable sources, according to the Climate Change Committee.
These ambitious targets are expected to ensure continued strong growth in the Renewable Electricity Generation and Wind Power Generation industries in the coming years, with plans confirmed to contract up to 12GW of renewable energy capacity in the UK’s fourth Contracts for Difference auction in late 2021, compared with less than 6GW selected in the 2019 auction. The significant increase in contracts awarded is expected to be supported by an extension in the number of technologies supported, with offshore wind, onshore wind, solar, tidal and floating offshore wind projects all eligible to bid.
In addition to directly benefiting renewable electricity producers, the UK’s transition to a low-carbon electricity network is expected to create opportunities throughout the industrial sector.
Industries operating throughout the wind power supply chain, such as the Engine and Turbine Manufacturing industry, are expected to receive a particularly substantial boost, with the government committing to producing at least 60% of the content of offshore wind farms domestically by 2030.
This will be supported by £160 million investment towards upgrading ports and building factories for the manufacture of offshore wind turbines and infrastructure, supporting the immediate creation of 2,000 construction jobs, as well as a further 60,000 jobs throughout the supply chain by 2030.
Striking a balance
Expanding the UK’s renewable generation capacity will be key to achieving decarbonisation targets. However, transitioning to net-zero emissions by 2050 will require an extensive transformation throughout the electricity supply chain.
The UK’s electricity grid is currently designed to support a unidirectional system of electricity power transmission and distribution from large centralised power plants. However, given the intermittent nature of renewable technologies, a more efficient method of transmission and distribution is likely to be required to sustain renewables as the dominant source of electricity generation.
The UK first set out its vision to incorporate Smart Grid technology in 2014. One of the first targets set towards the creation of a Smart Grid was the nationwide rollout of smart meters to households and businesses by 2020. This target has since been repeatedly pushed back, most recently to mid-2025, but once installed on a widespread scale, smart meter technology should allow for greater demand-side flexibility, ultimately contributing to further reductions in electricity consumption, particularly during peak hours.
Energy regulator Ofgem is also expected to play an important role in enabling an efficient energy network, hinting at a more direct link between revenue allowances and the achievement of decarbonisation targets under the RIIO-2 price controls, which regulate the prices and allowed revenue of companies that run the gas and electricity networks in Great Britain.
The transition of Distribution Network Operators to Distribution System Operators (DSOs), which is currently in progress, is also a fundamental part of developing a more efficient, decentralised network. DSOs will take a more active role in coordinating and balancing regional grids, managing a more complex connection landscape, while ensuring increased flexibility through the incorporation of battery storage technologies.
According to renewable energy association RenewableUK, the UK’s total pipeline of battery storage projects stood at more than 16GW in February 2021.
Additionally, BEIS hopes that relaxed planning legislation surrounding the construction of large batteries will help triple the UK’s energy storage capacity.
Conclusion
The transition to a green economy is likely to be a pivotal factor shaping public policy for years to come, with wide-reaching effects for households and businesses. While the winding down of conventional generation assets will inevitably displace workers within the energy sector, a transformation of the electricity network is widely accepted as a vital component of the UK’s fight against climate change, particularly amid growing pressure on the electricity grid triggered by the electrification of heat and transport.
Therefore, despite requiring a substantial amount of investment, it is hoped that the transformation to a low-carbon energy network will act as a catalyst for a sustainable economic recovery from the coronavirus pandemic, making the UK a world leader in clean energy.
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