5 October 2021

The chances of green energy by 2035 are net zero

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The Prime Minister is virtue signalling to the effect that the UK can decarbonise electricity generation by 2035. He claims it can be achieved through a combination of new nuclear, wind power, and decarbonised gas, either hydrogen, or conventional gas (methane) with carbon capture and storage.

This is deeply unlikely.

The UK uses between 20-60GW of power from summer to winter, between day and night. The role of the grid is to ensure it gets from where it’s generated to where it’s needed, when it’s needed, as efficiently as possible. Around 10% of power is lost in transmission – no power station is 100% reliable, and renewable power depends on the unreliable weather. Renewables require much more capacity to do less. The UK capacity for example has had to increase from 70GW to 100GW in the last decade. This will need to rise much higher, particularly as we switch to electric transport.

Nuclear power alone won’t solve the problem. It’s only good for baseload, can’t be easily turned on and off, and six months down time for servicing is typical. Too much nuclear energy overloading the system can cause blackouts just as assuredly as shortages. Nuclear is expensive, can take ten years to build, and the UK has a habit of always picking the worst technology.

Renewables, mostly offshore wind, have risen from offering 9GW to 48GW of capacity (so near 50% of UK capacity) in the last decade. But they actually provide less than 30% of the power generated. The backup solution to their 25-50% utilisation rates has been Combined Cycle Gas Turbine (CCGT) generation. This is easy to build, cheap and efficient, easily started and stopped. It can provide both baseload and dispatchable power and is limited only by proximity to a reliable supply of gas, which can be piped over large distances.

Gas power with carbon capture and storage (meaning methods for scrubbing CO2 from emissions, and their deposition, usually deep underground) sounds appealing but reduces the efficiency of a plant by 15-40%. This, alongside the cost of pipelines and maintenance, means it’s only appealing in areas of industrial need, such as Teesside and Grangemouth. But even that would render most gas generation and related industry uneconomic, at least in the UK. It’s a literal pipe dream.

So it’s entirely unclear how the Prime Minister intends to achieve his goal. Hydrogen is currently made from gas; battery storage technology is not ready. Hydropower is small and restricted by geography, bioenergy from waste and sustainably sourced wood requires more rubbish and land than we have. Solar is a trivial solution in the grey UK, and it’s intermittent anyway. Nuclear fusion is the great hope at every level for the future, but even the optimists see it as a more than 15 years hence.

The unintended consequences are twofold. First, it will encourage a bidding war for subsidies. There will be a lot of ‘green crap’ and a lot of waste. Second it will cause a collapse in investment in gas generation, which is currently the only thing that can actually make a renewables-heavy power system work. This to be clear is already a problem, CCGT capacity peaked in 2012, and has fallen a little since.

Asking people to invest in something you are trying to abolish by a fixed deadline only a few years away is not a very appealing prospect. When you add to this the moratorium on domestic fracking, the complexity of the North Sea Fiscal Regime, new green taxes, a risk of windfall taxes on any success, and arbitrary price controls, it’s a poison prospectus without a market.

If the Government doesn’t get more realistic about the role of gas and price signals in supporting the low carbon transition, it is inviting a simultaneous security of supply and affordability crisis the next time we have a cold winter. The capacity margin is already down to 32% and it will continue to fall.

If there is a crisis the only solution may be subsidies for gas and coal generation, which would be a particularly perverse position for a government that’s supposedly intent on getting to net zero.

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Andy Mayer is Chief Operating Officer at the Institute of Economic Affairs

Columns are the author's own opinion and do not necessarily reflect the views of CapX.