Comment
A green recovery: Renewable energy
In June 2019 the Government extended the UK’s carbon target from 80% to 100%, recognising the impact of climate change and the need to reduce carbon emissions to minimise its effects.
As a result of the wide ranging economic and social impact of COVID-19, there are increasing calls for the Government to prioritise a green recovery. A group of more than 200 top UK firms and investors recently called for a plan that prioritises the environment through investing in low carbon innovation and decarbonising the economy.
Meeting the target
To meet the UK’s 100% carbon reduction target by 2050, the Committee on Climate Change (CCC) has estimated that we need to quadruple our low carbon electricity generation capacity by 2050 and continue to phase out fossil fuel generation. One of the impacts of the UK lockdown has been a reduction in energy use, with a new record of 67 days of coal free energy generation, however sustaining this will require significant investment in energy infrastructure including new renewable energy generation, storage and management systems.
The most recent parliamentary progress report by the CCC on Reducing UK Emissions notes that initial steps towards a net-zero policy package have been taken but significant progress has not yet been made in preparing for climate change. The committee suggests that net-zero emissions and improved climate resilience, alongside climate investments, will be integral to COVID-19 recovery. As part of bolstering the UK’s renewable energy provision, the report notes that the Government should continue to use the Contracts-for-Difference (CfD) auction mechanism to deliver ambitious power sector decarbonisation during the 2020s.
Contracts-for-Difference Scheme
The CfD scheme is the Government’s main mechanism for supporting low carbon, renewable electricity generation. The Government has recently completed a consultation ahead of the fourth round of allocation for the scheme, which is planned to open in 2021 and aims to deliver 10GW of new projects. Significantly the consultation looks at the inclusion of onshore wind and solar pv as established technologies, with unsubsidised renewable projects now eligible to participate in the capacity market.
With solar pv costs continuing to fall there has been a marked increase in pipeline projects as subsidy free projects are now viable. The majority of pipeline projects exceed 20MW in size with some exceeding 50MW and 100MW. In May 2020 the Government granted a Development Consent Order (DCO) for the development of the UK’s largest solar park at Cleve Hill, Kent comprising a 350MW array along with battery storage.[1]
Offshore wind continues to fall significantly in price, around £35 MWhr, a decrease of over 60% in ten years and is now significantly cheaper than nuclear power.
The inclusion of onshore wind into the next CfD round marks a change in the strategic approach from the Government which, since 2016, has all but banned onshore wind development in England. While it is anticipated that onshore wind will be able to participate in the next CfD round proposals, from a planning perspective projects will still have to comply with long established requirements to demonstrate the support of the local community and be situated in locations identified as being appropriate in an adopted Development Plan.
While onshore wind will still face challenges in planning, positively over 67% of local authorities have now declared a climate emergency (read our latest comment on this here) with some actively looking at how renewable energy generation can be increased.
In addition to solar pv and wind, the CfD consultation includes provision to address barriers to the co-location of electricity storage with CfD projects; potentially opening up additional revenue streams for projects which utilise battery storage to help with local energy demand management to support the electricity network. Along with the removal of energy storage proposals from the NSIP regime, this could be a big stimulus for large scale deployment of battery technology and further increase the demand for the construction of gigafactories across the UK.
As we emerge from lockdown into our green recovery there have been significant shifts in favour of renewable energy infrastructure in combination with clear appetite from investors. At a national and local level, the declaration of a climate emergency and the calls for a green recovery must be backed by further financial and political support.
Please get in touch with Paul White or Mark Worcester for more information on renewable energy or the green recovery.
22 July 2020