MERCHANDISER
Lights to Stay on During UK’s Electricity Crunch
ENERGY SILVER LINING: The economic slowdown means the UK should be able to retire old coal, oil and nuclear power plants on schedule, without risking black- outs between 2015 and 2020. And the current ‘dash for gas’ is likely to be the last we see. So concludes analysis from Bloomberg New Energy
Finance (BNEF) published in a White Paper showing that weak power demand, improving energy efficiency and lifetime extensions for nuclear plants will mean the country is on track to keep the lights on through the critical years between 2015 and 2020. BNEF’s new study finds that a combination of
increased renewable energy capacity, along with already planned additional gas-fired capacity, will provide most of the additional electricity that the UK needs through to 2030. In addition, the UK’s second ‘dash for gas’, which
[the Northern Ireland power market is linked to that of the Irish Republic, not the mainland] will experience a shortage of power supply as 12GW of coal and oil-fired plants close by 2016 due to environmental requirements. An additional 7GW of nuclear is scheduled to close by the end of the decade. BNEF maintain that the main factors reducing the
need for new power plants in the UK are weak industrial demand and declines in domestic usage. The recession and European debt crisis have caused electricity consumption to fall significantly (by 9% from its 2005 peak). Power demand may not return to pre-recession levels within the next 20 years, as a full recovery in industrial production remains elusive and energy efficiency improvements are taking hold. And even if electric vehicles take off, their impact on electricity demand will be limited, according to BNEF’s analysis. The second factor helping to offset plant closures is the
large amount of new capacity – around 30GW – expected to be added between now and 2016. Around two-thirds of this will come from renewables, as large offshore wind projects come online and developers continue to build onshore wind and biomass. Although power from renewable sources is mostly intermittent, in aggregate these sources will always contribute some base level of output, and they are complemented by several large thermal projects such as RWE’s 2GW gas-fired Pembroke plant, due to come online this year. Beyond 2016, the country will continue to build high
could see the addition of 15GW of new capacity between 2010 and 2016 at a cost of £7.5bn, is likely to be the nation’s last. Renewable energy, nuclear power, energy efficiency and retrofits to existing plants should be able to meet all additional needs from 2020 onwards. The findings arrive as
the UK embarks upon its comprehensive Electricity Market Reforms, with plans for a carbon price floor, an emissions performance standard, a low-carbon feed-in- tariff and a capacity market. The reforms are designed to encourage a shift to a low-carbon power sector whilst maintaining security of supply. Until now, the government and other market
participants have expressed concern that Great Britain 16 March 2012
Power demand may not return to pre- recession levels within the next 20 years
levels of wind power, as well as increasing amounts of solar and marine – wave and tidal – depending on how the costs of these technologies evolve. Great Britain will also build some new nuclear plants – but not until the 2020s. These will act as a dependable source of zero- carbon electricity, and will help diversify the UK away from dependence on gas and renewables. Brian Potskowski, senior power analyst at BNEF comments; “The long lead times for building new nuclear plants and uncertainty over how they will be subsidised means that the recent agreement between the UK and France on nuclear cooperation has little impact on whether the lights stay on in the 2015-20 timeframe.” The report shows that while capacity margins will tighten, particularly after the main wave of plant retirements in 2015; “we
expect them to stabilise in the 10-15% range, which is generally seen as acceptable. We also expect some nuclear retirements to be postponed as plants receive life extensions in line with previous practices”. This means that after the current set of gas projects come online, there will be little need for more new gas- based capacity through to 2030 or beyond. Some existing
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