*[Enwl-eng] Renewables overtakes fossil fuels in British electricity

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      At the start of 2016, in an article noting some exciting changes in 
British energy, The Conversation published the following paragraph:

        Wind, solar and hydro – the weather-dependent renewables – together 
generated 14.6% of Great Britain’s electrical energy in 2015, the highest 
ever annual amount. Wind stormed (literally) past the 2014 record to break 
through the 10% milestone. Solar more than doubled to 2.5%.

      Eight years on, those numbers look tiny. Wind is now up to 29% and 
solar has doubled again. In 2015, coal still generated a quarter of British 
electricity, but last year it was down to 1%. Indeed the same author, energy 
analyst Grant Wilson, recently noted that 2023 was the first ever year when 
Britain would get more electricity from renewables than fossil fuels.

      You’re reading the Imagine newsletter – a weekly synthesis of academic 
insight on solutions to climate change, brought to you by The Conversation. 
I’m Will de Freitas, energy and environment editor, covering for my 
colleague Jack Marley, who is hiding in a decommissioned coal power plant. 
This week, we’re focusing on rapid changes in electricity generation – and 
what happens next.

      If you include electricity generated by “biomass” plants (which burn 
wood pellets, often imported from forests in America) then, as Wilson notes 
along with his University of Birmingham colleagues Joseph Day and Katarina 
Pegg, renewables actually first overtook fossil fuels in Britain in 2020.

      “Trees can of course be regrown, so biomass counts as renewable,” they 
write. “But the industry has its critics and it’s not globally scalable in 
the same way as the ‘weather-dependent’ renewables: wind, solar and, to a 
certain degree, hydro power.”

      In other words, if everyone started burning wood pellets for 
electricity we’d soon run into major problems, whereas one country 
installing more wind turbines or solar panels doesn’t mean there is less 
wind or sun left for others. They are effectively infinite resources.

      That’s why “weather-dependent” renewables are more appropriate for a 
global transition, and why 2023 was such a significant milestone year for 
Britain.

      However, this transition may be grinding to a halt. Britain’s 
electricity decarbonisation is mostly thanks to wind power getting cheaper 
and cheaper. But what happens if it’s suddenly not cheap anymore?

      Phil McNally, an electricity markets researcher at UCL, wrote in 
September last year about the failure of the latest round of “auctions” to 
bring forward any new offshore wind projects. “Consequently,” he writes, 
“the government’s own target of achieving 50 gigawatts of offshore wind 
capacity by 2030 is hanging by a thread, and investor confidence has hit a 
new low.”

      But this isn’t because the technology itself has become more 
expensive. Indeed, “offshore wind remains one of the cheapest and most 
suitable technologies available to the UK”. Rather, McNally explains:

        The primary factor driving up the cost of delivering a new offshore 
wind project mirrors a predicament that is currently facing us all – 
inflation has made things more expensive to buy and money more expensive to 
borrow. The rate at which prices are rising is starting to fall, but remains 
significantly above where it was two years ago. For those involved in the 
construction of an offshore wind farm, this means the cost of both the 
physical parts (such as the turbines) and the debt (bank loans) has gone up.

      This isn’t specific to wind power – prices have gone up for new gas or 
solar plants too. But given electricity generation is a must, “what truly 
matters is the relative cost, and offshore wind remains cheap relative to 
other technologies”.

      McNally also notes that the supply chain – the companies that provide 
everything from turbine blades to installation vessels or trained 
engineers – has been slow to catch up with demand and can therefore command 
higher prices.

      Given these economic and supply chain issues, he says the UK 
government should focus on producing a long-term delivery plan for the 
offshore wind sector that “includes the amount of offshore wind it wishes to 
procure in each auction, delivering confidence to industry and allowing the 
development of a healthy supply chain”. In addition:

        It could also include standardisation of technology to maximise 
further cost reductions and accelerate delivery. And it should […] make 
auction caps more reflective of current costs, so that consumers do not miss 
out on the cheapest forms of electricity.

      The companies that generate Britain’s electricity are doing well, at 
least. Michael Grubb and Serguey Maximov Gajardo at UCL estimate the total 
annual revenue to British electricity generating stations increased by £29 
billion as a result of the 2022 energy crisis.

      “The indications are that these revenues increased by about twice as 
much as overall generation costs,” they write. While “getting at the numbers 
is not easy”, their research backs up the widely believed view that firms 
generating electricity from gas were able to exploit a global increase in 
gas prices.

        Since these companies’ costs shot up following the start of the 
Ukraine war, it seems no surprise that their prices did too. We estimate 
their total annual revenue rose by about £13 billion, roughly trebling from 
the pre-COVID average of £6.3 billion. But the evidence suggests this 
increase was, in fact, much bigger than the increase in their costs.

      Renewable generators also saw profits increase: “We estimate their 
revenue doubled from £7.7 billion pre-COVID to £15.5 billion in 2022 – yet 
there is no reason to think their costs increased.”

      What happened? A lack of real competition in a market where gas still 
sets the overall price of electricity, combined with a decline in imports 
from mainland Europe (which helped regulate prices) and a continent-wide gas 
shortage, meant “electricity generators in Britain were able to raise prices 
further above costs”.

      And to go back to where we started, Grubb and Gajardo point out:

        The real paradox is that all this happened just as non-fossil 
sources, with stable costs, started to account for more than half of Britain’s 
electricity (56% if we include nuclear) … For how long can the declining 
fossil fuel tail continue to wag the dog of Britain’s renewables-based 
electricity system?

      - Will de Freitas, Environment Editor


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      Britain likely to generate more electricity from wind, solar and hydro 
than fossil fuels for the first year ever in 2023

      An important milestone set to be passed – if it remains windy.

      Read more


       Six energy records Britain broke last year

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      The government wants offshore wind to form the backbone of the UK's 
future electricity system – but a key auction has delivered no new projects.
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       Energy generators’ soaring revenues highlight deep problems in the 
way Britain prices its electricity

      British electricity generators saw their revenues increase by  £29 
billion in 2022 – here's why that happened.

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      Sent: Thursday, January 04, 2024 9:01 PM
      Subject: Renewables overtakes fossil fuels in British electricity

 
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