Low carbon electricity most cost effective for UK

Oct 22 2015

A low-carbon electricity supply is the most cost-effective way to meet the need for more generation in the 2020s given the UK’s climate change commitments, a Committee on Climate Change (CCC) report says.

In a new report, 'Power sector scenarios for the fifth carbon budget', the Committee sets out a range of future options to reduce the UK’s emissions from electricity in 2030. Low-carbon options in the power sector are important to support emissions reduction in other sectors, such as transport and heating, as well as to reduce emissions from the power sector itself. 
The new power sector scenarios seek to balance issues of affordability, security of supply and decarbonisation. They indicate different ways, rather than one prescriptive path, through which this balance can be achieved consistent with UK climate change targets.
The report sets out new analysis the CCC will take into account when it provides its advice to Government on the fifth carbon budget on 26 November 2015. The fifth carbon budget will set the maximum level of domestic emissions between 2028 and 2032 and marks the half-way point from the first carbon budget period (2008-2012) to the 2050 commitment to reduce UK emissions by at least 80% relative to 1990 levels.
Assessing the UK’s obligations under the Climate Change Act, alongside the requirement to ensure competitiveness, affordability and security of the UK power supply, the Committee finds that:
  • Investments to 2020 are largely committed already. These will reduce power sector carbon intensity from around 450 gCO2/kWh today to around 200-250 gCO2/kWh. Households are currently paying around £45 a year on their electricity bill to support this investment, and will pay around £105 by 2020 (of a total bill of around £500).
  • New investment in power generation will be needed in the 2020s to replace retiring coal and nuclear power and to meet future increases in energy demand.
  • Several low-carbon sources of power are likely to be cost competitive with new gas-fired generation facing a carbon price during the 2020s. Mature options, like onshore wind and solar, are at that stage already. Less mature options, like carbon capture and storage (CCS) and offshore wind, will require continued support into the 2020s if they are to reach maturity. These both represent good value investments for a society committed to climate targets.
  • Balancing all factors, power sector emissions of below 100 gCO2/kWh are an appropriate aim for 2030. The range of scenarios examined suggest that power sector emissions towards the upper end of the carbon intensity range of 50-100 gCO2/kWh, previously identified as being suitable for 2030, are appropriate. Emissions would be around 55 MtCO2 lower than if investment in the 2020s was focused solely on gas-fired generation.
  • There will be additional costs on bills from low-carbon investment in the 2020s. Under central assumptions, the impact on annual household bills of supporting low-carbon investment would increase from around £105 in 2020 to a peak of around £120 in 2030 (i.e. low-carbon investment in the 2020s would add around £15 to the annual electricity bill for a typical household).
  • Increasing system flexibility will be important to ensure security of supply at lowest cost. Developing a more flexible electricity system with responsive demand, interconnection to other markets and more electricity storage will support security of supply, reduce emissions and reduce costs. The Power sector scenarios report includes new analysis of the value of flexibility and assigns costs to intermittent generation, to cover their integration to the grid and the need for back-up capacity. 

"This report once again highlights the very important role that CCS can play in reducing emissions in the UK, potentially halving the cost of meeting the 2050 target in the Climate Change Act," commented Dr Luke Warren, Chief Executive of the Carbon Capture and Storage Association.

"Importantly, the CCC has found that as early as 2025 CCS can be deployed in the power sector without subsidy. This will not only benefit domestic electricity consumers but will also help secure the future of vital energy intensive industries such as the steel and cement sectors."

"CCS in the UK has been a long time coming, and we are now in the critical stage of the current competition with two projects set to take final investment decisions by the end of the year. These projects will lay the foundation for a strong CCS industry going forward and establish essential low carbon infrastructure. As the CCC has made absolutely clear; if the Government is serious about tackling climate change and keeping the lights on it simply must deliver two CCS projects from the current CCS competition."

"As the date for the Comprehensive Spending Review approaches, we urge the Government to keep its CCS promise and deliver on the outcome of the CCS competition – to ensure CCS can become cost-competitive with other low-carbon technologies in the 2020s."


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Committee on Climate Change

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