110 United Kingdom
legislative package , adopted in 2018 , which sets ambitious 2030 objectives for energy efficiency , decarbonisation , energy security , the internal energy market and competition . In the NECP , the government states that it expects to invest around £ 900 million of public funds between 2015 and 2021 in research and innovation in the power sector , including around £ 177 million to further reduce the cost of renewables in a number of areas .
22 Renewable Energy Market
2.1 Describe the market for renewable energy in your jurisdiction . What are the main types of renewable energy deployed and what are the trends in terms of technology preference and size of facility ?
The UK is particularly well placed to take advantage of wind power , with some of the best conditions in Europe and high average wind speeds . Both onshore and offshore wind farms are therefore an important renewable energy source for the UK , with 32.4 % of aggregate UK renewable generation coming from offshore wind projects and 31.4 % from onshore wind projects in the first quarter of 2020 . Examples include Orsted ’ s Hornsea One , located 120km off the Yorkshire coast in England , which is the world ’ s largest offshore wind farm with a capacity of 1.2GW , and the Walney Extension Offshore Wind Farm with a capacity of 659MW .
Bioenergy ( biomass or waste-fuelled plant ) projects are the UK ’ s second largest contributors to renewable energy generation . These include the Drax Power Station in Yorkshire , formerly the UK ’ s largest coal-fired power station , where three of the five remaining operational units are entirely dedicated to biomass , with a combined capacity of 1.9GW .
Hydropower and solar PV projects contribute a smaller ( but still significant ) percentage of UK renewable energy , and tend to be smaller-scale ( the majority being less than 10MW ).
2.2 What role does the energy transition have in the level of commitment to , and investment in , renewables ? What are the main drivers for change ?
In 2019 , following Parliament ’ s declaration of a “ climate emergency ” and recommendations from the independent Committee on Climate Change ( CCC ), the government legislated for net zero greenhouse gas emissions by 2050 . One of the principal ways in which the UK proposes to meet the 2050 net zero target is by increasing the use of renewable energy . The CCC has advised that the UK could require four times the amount of renewable generation from current levels .
A government Energy White Paper is expected to be published in the autumn of 2020 by BEIS , having previously been due in the summer of 2019 and then again by the end of spring 2020 . The White Paper is expected to provide an insight into the government ’ s plan for the UK to achieve net zero by 2050 , by promoting the use of technologies such as “ blue ” hydrogen and carbon capture and storage , alongside renewable technologies , to support a green recovery .
2.3 What role , if any , has civil society played in the promotion of renewable energy ?
The private sector has been subject to increasing awareness and implementation of “ green ” or “ socially responsible ” investment policies ( from both equity and debt providers ). For example , in November 2019 , the European Investment Bank announced that it will end financing for fossil fuel energy projects , including gas projects , from the end of 2021 . Instead , it plans to increase support for investments that accelerate clean energy innovation , energy efficiency and renewables .
In addition , at a community level , there has been a noticeable growth of on-site distributed renewable generation projects in recent years ( both residential and commercial ), which is underpinned by general environmental concerns and technological innovation , as well as by government policy .
2.4 What is the legal and regulatory framework for the generation , transmission and distribution of renewable energy ?
The Energy Act 2013 ( Energy Act ) is the principal legislation relating to renewables , establishing a legal framework with a key aim to secure affordable and low-carbon electricity . The central provisions of the Energy Act relating to renewable energy include the introduction of :
■ provisions to enable the Secretary of State to set a 2030 decarbonisation target range for the electricity sector in secondary legislation ;
■ a statutory framework for contracts for difference ( please see question 3.2 for more detail );
■ the Capacity Market , being a market to ensure the security of electricity supply based on the government ’ s forecast of electricity demand ; and
■ access to markets via long-term contracts for independent renewable generators ( including power purchase agreements ), and through liquidity measures to enable the government to improve the liquidity of the electricity market .
The Electricity Act 1989 ( Electricity Act ) is the principal legislation governing electricity generation – including from renewable sources . Subject to applicable exemptions , an electricity generator requires a generation licence from Ofgem to operate . Please see question 4.1 for more detail .
2.5 What are the main challenges that limit investment in , and development of , renewable energy projects ?
The challenges include :
■ Uncertainty as to the long-term laws , policies and the related incentives relating to the renewable sector that may be adapted by successive governments is a challenge to any investment modelling . For example , onshore wind projects benefitted from certain government subsidies which were then removed in 2016 , and then , in early 2020 , onshore wind subsidies were revived .
■ Intermittency of output ( given that renewable sources , by their nature , will vary and not be continuous ) presents an issue for renewables integrating into a stable power supply . This can be mitigated , to some extent , with energy storage systems . However , whilst the technology is developing rapidly and the costs are falling , such storage systems can be expensive ( particularly on large-scale projects ).
■ Much of the technology involved with renewables projects is new or rapidly evolving , and there is an investment risk associated with any nascent technology including in respect of deployment issues and risk of obsolescence .
■ Grid inflexibilities mean that integration of variable renewable sources into grid infrastructure creates increased complexity including with respect to balancing supply and demand .
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Renewable Energy 2021