Renewable capacity overtakes fossil fuels

The installed capacity of renewables has overtaken that of fossil fuels for the first time ever, according to the latest Electric Insights report from Drax.

Over the last five years, a third of fossil fuel generation in Great Britain has retired, lowering the total to 41.2GW. At the same time, renewable capacity has tripled to 41.9GW.

The quarterly report produced by researchers at Imperial College London says the rollout of renewables has “eclipsed” the “dash for gas” seen during the 1990s.

“At its peak, Britain was building 2.4GW of new gas-fired power stations each year,” it explains.

“So far this decade, an average of 3.8GW of new renewable capacity was built, made up of 1GW of onshore wind, 0.8GW of offshore wind, 1.4GW of solar and 0.4GW of biomass.”

Wind accounts for the largest sharing of renewable capacity, having passed the 20GW mark in September. Great Britain has become a “world leader” in offshore wind, hosting 45 per cent of global capacity. Solar comes in second with 13GW installed and biomass in third with 3.2GW.

Installed generation capacity – renewables versus fossil fuels

The report also examines the causes behind rising wholesale power prices which have hit a ten-year high after increasing by almost a half over the last 12 months. Day-ahead prices averaged £60/MWh over the three months to the end of September, compared to £42/MWh in the same quarter last year.

It says generators are facing cost pressures on three fronts: gas prices have swollen since summer due to increased global competition for LNG supplies; the price of EU Emissions Trading System allowances has soared over the last year after reforms were passed to end a long-running surplus; and the pound remains weak against foreign currencies as a result of the vote to the leave EU.

Meanwhile, balancing costs averaged £3.8 million per day over the third quarter of 2018 – the highest level on record – and added 6 per cent to wholesale prices. Strong wind output pushed the daily bill over £10 million on the three occasions during period.

Report author Iain Staffell from Imperial College London said: “The cost of balancing the system has doubled in the last four years. The amount of flexible generation on the system is a key driver.  Balancing costs rise when the output from flexible generators such as gas, coal, biomass and hydro, falls below 10GW.

“Having a brittle power system with limited flexibility will be more expensive to control. More flexible generation, storage and demand-side response will be critical in minimising system costs in the future.”

Impact of renewables and flexible generation on balancing costs in Q3 2018

Drax Power chief executive Andy Koss said: “More renewables are crucial for reducing carbon emissions and helping us to meet our climate targets – but flexible, lower carbon generation, is also clearly vital for controlling the costs of maintaining a stable, low carbon power system.

“The IPCC’s report recognised that in order to meet our climate change targets, up to 85 per cent of global power generation needs to come from renewables by 2050. This means the remainder will have to be provided by flexible sources, which can support the system and help to keep costs down – such as biomass, hydro, pumped storage as well as high efficiency gas.”