The Clean Growth Strategy – where does it leave the cheaper renewables?

There has been a significant amount of comment on the UK Government’s Clean Growth Strategy (CGS), much of it very positive. This is justified as this is an important document from the Government as a whole (note the HMG logo on the front, not BEIS), setting out a vital agenda of work for the coming years. It rightly extends the policy focus to heat and transport, which have been the ‘problem children’ of decarbonisation, especially heat. Above all, the change in message from ‘green hurts’ to ‘green is a motor for growth’ is extremely welcome. While those, like me, with long memories might worry a bit that this is like the 2003 Energy White Paper, which said all the right things but didn’t lead to the promised revolution, if it does what it says on the tin then there really has been a sea change in how Government sees decarbonisation.

However, it is worth tempering this enthusiasm with a small dose of reality. This is the beginning, not the end, of many policy processes, and there will be many consultations and decisions that can get bogged down in trench warfare as incumbents defend their interests. Even with the raft of new policies, there is still a projected shortfall in meeting the 4th and 5th Carbon Budgets, with some accounting jiggery-pokery being put forward as the means to say the law has been complied with. And perhaps most importantly, the dog that didn’t bark on the 12th of October shows that Politics is still having an impact on this Government’s room for manoeuvre.

If one looks at the section on low-carbon power, there is the silent sound of people studiously ignoring the obvious because it is expedient to do so. Overall, that section had the least that was new or ambitious; not surprising perhaps, since the power sector has been the most successful story in decarbonisation, and there is more already committed. There is an implied aim of getting to a carbon intensity in the power sector of about 50gCO2/kWh (see Figure 25 for evidence of that), which seems to go further than before. There is also a welcome opening for offshore wind to go beyond the ‘10GW in the 2020s’ objective that was set in Amber Rudd’s ‘reset’ speech of November 2015, when she was Secretary of State for DECC. Whether the door is more than ajar for wave and tidal (stream or range) is yet to be seen, though at least they were mentioned. Apart from the opening of Pot 2 CfD auctions to remote island projects, however, there is nothing there for onshore wind, or larger solar developments for that matter.

Onshore wind is caught in a political Catch-22: increasingly obvious that it is cheap and ought to be part of the mix, but if Government states that and brings it back into the CfD fold, then a large chunk of it backbenchers will go ballistic. Given the current Parliamentary arithmetic and the small matter of Brexit to navigate, why would the Government give itself another political headache? Best (from its point of view) to keep schtum and hope not too many people notice. Ground-mounted solar is the collateral damage here, as the best way to avoid talking about onshore wind is not to run a Pot 1 auction.

Quite how Government expects to get power sector emissions to 16mt of CO2 per year by 2032 without onshore wind and large-scale solar is not clear to me, at least not without having to spend a good amount of money more than is necessary. I think the ultimate lesson of the CGS is that, even within a significant, game-changing policy document, Government doesn’t have the cojones to face down its right-wing backbenchers and insist on a rational return to the cheap renewables. It is surely time for the industry to come up with a collective solution of its own. I don’t refer to corporate PPAs here – there isn’t the depth in that market to sustain a sensible industry on its own. No, if Government isn’t going to insist on having the cheapest resources in the mix, then industry has to take up the challenge and put in place a more voluntary price stabilisation mechanism of its own so that suppliers can access the best sources of power to keep customers’ bills low. Can we rise to this challenge?

 

Dr Gordon Edge

Director, Inflection Point Energy Consulting

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