UK Renewable trade associations are fighting for the survival of the renewable industry against an onslaught led by the Treasury. If the Treasury gets its way almost all future development for renewable energy in the UK will be stopped. Continued incentives and tax breaks for nuclear power, shale gas and conventional power stations will, however, remain in place.
The Treasury is pushing for:
a) An end to the policy of issuing CfDs as part of the scheduled review of electricity market reform which takes place next year. This will leave next year's auction for long term power purchase agreements giving set prices to be paid for developers (contracts for difference - CfDs) as being the last. Although it is expected that a substantial amount of capacity will be awarded to offshore wind developers next year onshore wind and onshore solar projects are not allowed to compete in these auctions. The only exception will be Scottish island inshore wind schemes, a minority of which will actually be built because of the cost of connecting them to the mainland. But the Treasury want all CfD auctions (offshore wind included) to be scrapped after 2019. This would be the biggest act of demolition of the renewables expansion programme of course, but other cuts are said to be discussed including:
b) The ending of all incentives to solar pv, including for solar power exported to the electricity distribution system. Domestic solar generators will receive nothing for this energy in future under plans preferred by the Treasury. This will be a unique humiliation for solar generators who will be the only class of generators in the country who will not be paid for the electricity they send into the grid. It will also be humiliating in international terms. Even the most conservative US states have rules which mean that solar pv generators must receive basic levels of payment for their exported energy.
c) The ending of the carbon price floor which makes fossil fuel more expensive and non-fossil sources relatively cheaper. The Treasury is considering replacing this with an increase in the climate change levy. This raises the price of energy for larger energy users but since 2015 has been levied on energy from renewables as well as other sources. Getting rid of the carbon price floor would shift the balance in electricity generation towards coal and away from non-fossil fuels.
Meanwhile the Minister for Energy Claire Perry is said to be arguing against the Treasury's atavistic tendencies. She has even been arguing for months that CfDs might be offered to onshore wind in the future, although there is absolutely no sign of this happening in terms of Government instruments. I do not doubt her intentions, but alas she seems to be fulfilling, in practice, a role of putting a green facade on Government policies which are heading back towards conventional energy sources. As a minister of state she has little influence on her own, and even if Greg Clarke, her Secretary of State were to wade in to give her more public support (so far he hasn't stirred much), the attitudes of the Treasury still have to be overcome. The Treasury continues to support the preference being given to conventional energy sources.
The incentives offered for Hinkley C are very high - and even more Government guarantees are being discusssed for the Wylfa nuclear project. Meanwhile conventional power plant can bid for annual rounds of 'capacity mechansim' payments, a facility which suits conventional power plant much better than variable renewables. On top of this shale gas entrepreneurs are being offered generous tax breaks not available to renewable energy developers.
Some references:
https://www.pv-magazine.com/2018/10/15/germany-tendered-pv-projects-need-no-public-subsidy-in-august/?utm_source=dlvr.it&utm_medium=twitter
Many windfarms given contracts in recent auctions are also 'subsidy free' on the same basis, with average prices ranging from 47 euros/MWh to 61 euros per MWh. See
https://cleantechnica.com/2018/08/24/average-price-hits-e61-6-mwh-in-latest-german-onshore-wind-auction/
The Government talks vaguely of 'refinements' being made to the CfD round in 2021. Some see hope for allowing bids from onshore solar and wind, but others are very sceptical. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/748296/delivering-clean-growth.pdf
https://www.businessgreen.com/bg/news/3064822/budget-chancellor-urged-to-retain-and-strengthen-carbon-price-floor
https://utilityweek.co.uk/onshore-wind-farms-embargo-national-planning-review/
https://www.telegraph.co.uk/business/2018/10/17/british-energy-giants-defend-carbon-price-against-treasury-cull/
Maybe you shouldn't be too concerned, as there is a reality that developments in advanced nuclear power reactors will kill off renewables technologies over the next 10 to 15 years anyway.
ReplyDeleteNuScale have a customer and a site and their 720 MW nuclear power plant [npp] will be operational in 2026 with an overnight cost of £2,268 million. That's equivalent to a 3,200 MW 'Hinkley' of £10,080 million - half the price.
GE-Hitachi are publicly commenting their BWRX-300 Small Modular Reactor [SMR] will have a FOAK 'Hinkley Equivalent' at £8,000 million by 2030. But even more jaw-dropping is their NOAK overnight cost for a 'Hinkley Equivalent' of £4,800 million - just 24% of Hinkley's current overnight cost.
At 32:50, David Powell, head of GE-H's European operation makes the announcement: https://www.youtube.com/watch?v=hNpant6xANE
Maybe you could consider becoming a member of the BWRX-300 facebook page to keep up with developments.
So a case of "Yes, Minister" revisited for real (again)?!
ReplyDelete