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Our Vision of the UK's Future Energy System

By Marina Valls, Chief Economist, RenewableUK

What will the UK’s energy system look like in ten, twenty or thirty years time? How radically will it have changed, and which technologies will we be using to ensure we meet the Government’s target of net zero emissions by 2050? How will the market evolve, what opportunities are there for new business models? What steps should Government take to help the renewable energy sector to ensure all businesses and consumers take full advantage of the economic and environmental benefits it can offer?

These are some of the questions I’ve examined by drawing on the expertise of our member companies and our own market intelligence, in a report which we’ve just published called “Powering the Future: RenewableUK’s Vision of the Transition”.

We know already that reaching net zero will require a step-change to transform the system. RenewableUK’s members are already investing in innovative technologies such as floating wind and scaling up energy storage. There’s a palpable feeling that we’re at the start of a transformative period, so this is a stimulating time to be working in this part of the energy sector. Our members are disrupting the status quo, rethinking how energy is generated and how it is delivered, creating new business opportunities for everyone, attracting tens of billions in investment to the UK and creating thousands of high value skilled jobs.

The headline findings of the report include our assessment that generation from renewable energy could grow much faster than it has to date. In our optimum deployment scenario, renewables share of electricity generation could increase to 76% of the UK’s power mix by 2050.

Wind will be the backbone of our modern clean energy system. The UK’s offshore wind sector is the biggest market globally in terms of investment. The industry can meet the Government’s target of 40GW by 2030, more than quadrupling current capacity. With the right policies in place, we have the potential to ramp up to 90GW by 2050. This would include up to 2GW of floating wind over the course of this decade, and as this innovative technology becomes more widespread, we are confident it will reach cost parity with fixed bottom offshore wind during the 2030s.

We’re also envisaging significant growth in onshore wind as a result of the re-introduction of Pot 1 CfD auctions, with capacity doubling to 26GW by 2030 and reaching 36GW by 2050.

So that’s 126GW of wind by the middle of this century – nearly six times our current capacity, to meet a growing demand from electric vehicles, heat pumps, and all the high-tech appliances which have become indispensable parts of our lives.

Although wind will take the lead, there are obvious benefits to a diverse clean power mix. A wide range of existing technologies such as wave and tidal power will help us achieve net zero. To commercialise these fully, there’s a need for a dedicated support from Government so that we can create local economic benefits and build up a strong export sector, as we’re currently a world leader in marine energy.

RenewableUK now represents much more than wind and marine energy; we have embraced emerging technologies like green hydrogen too. Our industry believes that renewable hydrogen will become cost competitive with other forms of low carbon fuels within this decade. Renewable energy from wind farms can be used to power the process of electrolysis which manufactures green hydrogen. Renewable hydrogen provides an excellent opportunity to build a flexible decarbonised energy system: It can be stored, transported, and used to produce power or heat as a replacement for gas in times of peak demand. A variety of different projects to produce green hydrogen are emerging in the UK showing the clear bullish outlook in the renewables sector. The development of renewable hydrogen should be a priority as it can also be used instead of gas in carbon-intensive sectors such as steel manufacturing and other heavy industries, as well as in transport, with hydrogen fuel cells in heavy good vehicles and shipping from the mid-2020s onwards. Our report states that the UK’s mix of high renewable energy capacity and strong climate change policies mean that renewable hydrogen is likely to become cost competitive here faster than in other countries. Capitalising on this is just one example of the way renewables can stimulate our economy after the Coronavirus pandemic.

Consumers will have a key role to play too, storing their own power for example by charging up electric vehicles in periods when power is cheap and feeding it back into local networks when it pays them to do so, as well as installing low-cost heat pumps. We will all become more aware of the advantages of flexibility – using power in homes and in factories when it makes the most economic sense to do so. This means the modernisation of the energy sector will have a huge impact beyond the energy industry itself.

Our report sets out a series of recommendations to policymakers to achieve all of the above, including providing a supportive framework for offshore wind including floating wind, maintaining the route to market which has now re-opened for onshore wind, and building up the market for innovative technologies like renewable hydrogen and marine power so that economies of scale can drive costs down, just as they have done for wind. We need to ensure that we have the right market regulations in place to speed up the transition to a low carbon system now, including a fair approach to the way charging for access to the network operates, and a framework which encourages consumers to adapt the way they use power in homes, offices and factories to save money. Now is the time to translate our 2050 net zero ambition into clear medium-term targets so that businesses can incorporate them in their objectives and do what they do best. If you want to build up new supply chains you need medium-term milestones to provide reassurance on the level of ambition and clarity on how to achieve them. Examples of these milestones include public-private partnerships such the landmark Sector Deal for offshore wind – the first for any renewable technology. This will ensure that we all benefit from the smart, flexible, clean energy system which the UK deserves. We’re proud that the innovative companies we represent are leading the way in developing the technology which will make this vision a reality.



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