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Wednesday
12 Aug 2020

46 GW Increase in Renewables Required by 2030 in the UK

12 Aug 2020  by ModernPowerSystems   
Forecasts from analyst Cornwall Insight’s ‘Benchmark power curve’ suggests that up to about 46 GW of new build renewable technology (11 GW onshore wind, 10 GW solar and 25 GW offshore wind) may need to be developed in the UK by 2030 to keep pace with 2050 net zero targets.

This large-scale deployment of very low/zero marginal cost wind and solar technologies, as well as increasing interconnection in the 2020s, is likely to have a depressive impact on wholesale power prices out to 2030.

Further modelling also shows that with an increase in high intermittent generation levels, it is likely the market will see a corresponding rise in price volatility. The volatility in the power price in 2019 was valued at £13/MWh (credit to Ionic Consulting), but between 2020-24 modelling suggests an increase in volatility in all scenarios to between £18.2/MWh and £23.1/MWh. This could rise to over £50/MWh by the 2030s.

James Brabben, wholesale manager at Cornwall Insight, said:

“The net zero target is defining the shape of the future power market in terms of absolute value and volatility. This is certainly true in the period to the 2030s before we see material changes in power demand from widespread electrification in heat and transport.

“We have been given a glimpse of what the future may hold during the COVID-19 lockdown. High renewables generation, caused by low demand over lockdown, created up to 15% discount rates for solar and wind technologies against average day-ahead prices over April and May 2020.

“Our forecast shows similar discount levels could be the norm in the 2020s, especially as more offshore wind comes onto the system, and before we see power demand climb significantly from the electrification of heat and transport.

“With forecasts like these, the prospect of lower and more volatile prices creates uncertainty for those investing in “subsidy-free” or merchant capacity, especially if you need to attract risk-averse investors.

“One potential solution to the cannibalisation issue in a net zero world is reform to the wholesale markets, so short-run costs no longer set prices. This would be a courageous initiative, but nothing should be off the table given the scale of the net zero challenge. A programme to consider such reforms and which are desirable for net zero should, we think, be considered.”

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