Renewables are on course to overtake fossil fuels as the primary source of power in Britain during 2020, according to a new report by energy market analyst EnAppSys.
The study predicts wind, solar and other forms of renewable generation will generate 121.3 terawatt hours of electricity during 2020 compared with 105.6 terawatt hours from coal- and gas-fired power stations.
The analysis, based on current trends, assumes declining fossil fuel generation versus the rise in generation from renewable sources continues at the same annual rate.
Though the EnAppSys report shows coal and gas-fired power stations produced a combined 130.9 terawatt hours against 95.9 terawatt hours from renewables in 2018, the latter figure was an increase of 12.7 terawatt hours – up by 15.2% – on 2017 volumes.
According to the report, in 2018 gas provided 37.6% of the total amount of electricity in the UK, while renewables accounted for 31.2% and nuclear generation supplied 19.9%. Imports provided 6.3% of electricity while coal supplied 5%.
In 2018 a rise in the number of offshore wind farms that were commissioned or entered full operation during the year, drove the increase in renewables generation, the report states.
As levels of renewable generation have climbed, gas-fired output has remained relatively static while levels of coal-fired generation have slumped 89% since 2012.
In the short term at least, wind will continue to be the primary source of renewable generation having produced a record high share of the renewables mix, 55.4%, in 2018, according to the study.
EnAppSys director Paul Verrill said: “With the moratorium on onshore wind and reductions in capital cost of offshore wind farms, it is likely that more of these offshore projects will come on stream in future years, which will drive even higher levels of renewable output.”
New electrical transmissions infrastructure that came on line in 2018 will increase further the contribution of renewable energy to the UK fuel mix.
However, constraints still persist despite the investments, according to Verrill.
The rise of renewables is driving changes in activity in the UK market, with conventional power generators having to adapt to lower levels of activity and find ways to offset any lost income as a result.
This situation has been exacerbated by the suspension of the Capacity Mechanism (CM), which pays generators to invest in new capacity or keep existing plants open in the event of higher-than-expected demand.
The effect of this is to create an oversupply of thermal generation in the market to ensure that the system copes with days of low renewable generation.
EnAppSys said the suspension of CM payments to these generators, but the obligation for them to still be available, has contributed to financial pressure which will need to be resolved soon if this excess capacity is to remain in the system.
Verrill said: “With conventional power stations still required to meet peak demand requirements, the suspension of the CM payments that paid them to be available is a concern in terms of ensuring plants are incentivised to remain in the market.
“Against this backdrop, the margins for thermal power generation fell to 2014 price levels as the impact of reduced demand, increased levels of wind generation and very competitive market dynamics placed downward pressure on profits.”
He said that this occurred despite overall market prices being 30% higher than in 2017, driven by higher gas prices and a recovery in the EU carbon trading market.
“This dynamic should settle down over time, but with rising competition in the market driven by the growth of renewables it will become necessary to reinstate the CM payments or some other alternative to fill the gap created by the lost income,” Verrill said.
“If this is not the case, it’s likely that plant closures will be necessary to remove oversupply from the system and this will lead to decreased security of supply,” he added.
