No need for ‘gas bridge’ to go from ‘coal to clean’

The UK is unlikely to need any new baseload gas generation to fill the gap left by the planned closure of coal plants, WWF and Sandbag have claimed in a new report.

The environmental groups say the growth of renewables has undermined the investment case for large combined-cycle gas turbines (CCGTs). They are losing out to more flexible alternatives which can back up intermittent renewable generation at a lower cost.

When the government announced plans in 2015 to phase out all unabated coal generation by the middle of the next decade, ministers expected the closures to be accompanied by a second “dash for gas”.

However, WWF and Sandbag said it now looks likely the UK will be able to “leapfrog” this “gas bridge” and move straight to a clean power grid.

There are currently seven coal-fired power stations left to close in the UK with a total capacity of 13.7GW.

The capacity market has already contracted around 11.7GW of replacements – mainly peaking plants (reciprocating engines and open-cycle gas turbines), storage, demand-side response and interconnectors – which are due to come online between 2018 and 2021.

Their success has come at the expense of large new build CCGTs, which according to the report, have so far failed to secure a single agreement in the capacity market.

This excludes: the Trafford project, which reneged on its contract after it failed to obtain financing; the Carrington plant, which was already nearing completion when it secured an agreement; and Centrica’s King’s Lynn project, which is a smaller repowering of an existing gas plant.

Ten CCGT projects with a combined capacity of almost 12GW missed out on contracts in the latest T-4 auction in February. A further five projects with a capacity of around 10GW are preparing to enter future auctions. “This means almost half of all Europe’s prospective large gas plants are planned for the UK,” the report states.

However, WWF and Sandbag expect these projects to continue to be outbid by more flexible capacity. The report says, under current policy, the Carrington plant which came online in 2016 is therefore likely to be “the last large gas plant built in the UK”.

“Amazingly, the UK’s coal phase-out will not require a ‘gas bridge’ as many predicted: surging renewable energy ensures that gas use in the power sector has already peaked,” said Sandbag analyst Charles Moore.

Renewables Replacing Coal

Source: ‘Coal to Clean’, WWF and Sandbag. Calculations based on figures from the Department for Business, Energy and Industrial Strategy and Ofgem.

The report includes a series of recommendations for government to ensure the UK continues to avoid the need for new baseload gas generation:

• Unleash the potential onshore wind and solar by allowing them to bid for Contracts for Difference in future auctions. “Both technologies have short construction lead times and significant existing planning consent. Onshore wind is demonstrably cheaper than UK electricity wholesale prices, and with the UK’s first subsidy-free PV farm already commissioned, solar should be competitive too.”
• Do not bring forward policy measures to support new build CCGTs. The review of the capacity market announced in March by energy and climate change minister Claire Perry should not be used as an opportunity to do so.
• Prevent excess emissions from smaller, less fuel-efficient peaking plants as “poor market design may be artificially inflating running hours.” The 450gCO2/kWh emissions limit proposed in the coal phase-out legislation should be extended to all new build generation with a thermal capacity of more than 1MW. “This will ensure small peaking gas is only used when absolutely necessary to support the grid”.
• Increase innovation funding for long-range electricity storage technologies which can fill in for seasonal and multi-day lulls in renewable output.
• Begin planning for a gas phase-out. “Policy is needed immediately to mitigate the risk of a slower decline in gas use caused by: increasing demand; delayed or cancelled new-build nuclear projects; or a reduced volume of electricity imports.” Over the long-term, the government should look at how seasonal energy storage and carbon capture and storage can be used to lower gas emissions to zero.

“Measures to support the construction of a new wave of large gas plants would prove a costly mistake for energy bill-payers and the climate,” added Moore.

WWF head of climate and energy Gareth Redmond King, said: “The UK government is leading the way and has set an international precedent by sending coal to the dustbin of history. However, it is essential the government does not substitute one dirty power source for another.”