The path to clean power is clearer – and clearly demanding

The new National Energy System Operator (NESO) has produced its first piece of advice to government on the 2030 clean power mission. This is an impressive turnaround given NESO has only existed properly since the summer, after the role of energy system operator was taken over by the government from National Grid ESO. 

The top-line is that the 2030 clean power target is achievable but can only be met by doing things differently, with reforms needed to planning, grid connections and electricity markets. 

It identifies three key areas – renewable generation, flexibility, and the grid – which all need to deliver at rapid pace simultaneously, at the limits of feasibility, with failure in any of them leading to failure overall. 

Assuming the government follows this advice the path to 2030 is now clearer

The report produces two different pathways to 2030. But, as it acknowledges, what is most noticeable on the surface is how similar they are. One is built on delivery of new low carbon dispatchable power plants (CCS or hydrogen) and the other on more offshore wind. But both assume that wind and solar (particularly offshore wind) provide the backbone of the system, that demand flexibility increases four-to-fivefold, and that the UK retains a gas fleet of a similar size to today to ensure security of supply. 

The advice also sets out clearly that NESO sees ‘clean power’ as meaning as much power being generated from clean sources as Great Britain consumes across the year with unabated gas making up less than 5% of generation in a typical weather year. 

This leaves the shape of the low carbon power system and the aims of the 2030 mission much clearer. However, the path to 2030 is still incredibly challenging.

Getting to clean power by 2030 requires a complete step change in pace and approach

Infrastructure needs to start being built in the next 6-24 months, but planning consents are currently taking 21 months for offshore wind in England and up to 35 months for onshore wind at the national level. And more than twice as much new transmission network needs to be built in the next five years than was built over the last decade. Starting to deliver infrastructure in this timescale requires significant reforms to planning, but NESO is clear that this cannot be at the expense of public consent. That is a difficult balancing act, within a very short period of time. There is also a tension between the goal of building up UK manufacturing capacity in these sectors and delivering as quickly as feasible. Given all these trade-offs, it might have been useful if NESO had also included a 2035 pathway to give an idea of the additional costs of moving to 2030.

Both NESO pathways place considerable importance on demand flexibility. That means consumers shifting when they use electricity in response to market signals. While this could reduce bills it will requires significant behaviour change. New technologies will make this easier. But, as the issues with the smart meter rollout have shown, disseminating new technologies is not necessarily straightforward, particularly when they depend on consumer take-up. More active public engagement from the government or energy companies will be needed to explain what is needed, how it can be done, what technologies are available, and the benefits to consumers. 

There are still lots of areas with outstanding questions

Both pathways also raise questions about whether there is sufficient skilled workforce and whether supply chains can cope, with NESO suggesting the transition to clean power can be paid for without increasing costs to consumers provided the increased pace does not overheat supply chains or otherwise drive up project costs. 

The NESO advice also assumes that a significantly higher carbon price will be levied on fossil fuels including gas – leaving gas generation more expensive than renewables – but the UK is yet to move this level of carbon pricing. Consumer costs will also be dependent on how electricity markets are structured. NESO recommends moving to locational pricing (where wholesale energy prices vary to reflect the value of energy at different locations) and argues that a lack of clarity around future market arrangements could act as a barrier to delivering by 2030. But entirely reforming electricity markets at the same time as transitioning to clean power is a big ask of both government and the private sector.

The clean power mission continues to lead the way

With the publication of NESO’s advice the clean power mission continues to show the most progress (at least publicly) of all the government missions – moving towards setting clear aims and a pathway to meeting them. 

The next step is for DESNZ to consider this advice and turn it into their own roadmap. As we argued in a recent report, that plan should be iterative and include clear milestones and metrics for measuring progress as well as a proposed timeline for when key policy decisions will be taken to give industry more certainty. 

The clean power mission has got off to a quick start, and this NESO advice provides a good next step. However, as NESO says, delivery needs to continue at full pace if 2030 is going to be achievable.