Energy Industries Council (EIC)

UK turns to renewables and low-carbon power to bolster energy security

In the aftermath of geopolitical challenges, energy and climate crises along with economic side effects from the turbulent events that marked 2022, the UK is pivoting towards renewable and low-carbon energy in a push to strengthen energy security, outlines the new report from the Energy Industries Council (EIC), an energy industry trade association and voice for the global energy supply chain.

Energy Industries Council (EIC)

Following the Ukraine crisis, the global energy market went into turmoil in 2022, illustrated by oil and gas price volatility, and the situation in the UK was not any different, as political and economic uncertainty gripped the Conservative government throughout 2022, undergoing two transitions of power, from Boris Johnson to Liz Truss, and then from Liz Truss to Rishi Sunak.

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Moreover, the unprecedented spike in wholesale gas prices in early 2022 led to the failure of 29 energy suppliers in the UK and a rise in Ofgem’s price cap, contributing to a cost-of-living crisis and revealing vulnerabilities in the UK’s energy security.

This became a key priority for the UK government, as demonstrated by the release of the British Energy Security Strategy, focusing on expanding the domestic UK energy supply alongside commitments to completely remove Russian oil and coal imports by the end of 2022, and Russian gas “as soon as possible thereafter.”

The EIC underscores that the strategy received a mixed response from the energy industry, with many in the offshore wind, solar, hydrogen and nuclear sectors praising the UK government’s ambition to focus on these sectors in achieving net-zero. However, others claimed that the strategy raised more questions than answers in relation to energy efficiency, inward investment, and supply chain capabilities.

A lot of attention was placed on the nuclear aspect of the strategy, with many stating that 24 GW of installed nuclear capacity by 2050 was unrealistic, underestimating the challenges in the nuclear power sector surrounding skills, development costs and supply-chain capabilities.

With the UK still being highly dependent on natural gas while its nuclear capacity is dwindling, as reactors reach the end of their lifespan, the EIC’s report indicates that the country has failed to install the renewable capacity required to prevent consumer bills from skyrocketing.

Despite this, the report underlines that the UK has a strong pipeline of projects, either planned or under development, across multiple renewables and new technology sectors, thus, the challenge would be to ensure that the barriers to growth and innovation continue to be removed and the necessary measures are put in place to maximise investment in the wider UK energy market.

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According to the EIC’s UK Operational Insight Report 2022, the UK energy market is shifting its focus to renewable energy in response to Russian sanctions and growing concerns over fossil fuels, as the country saw a surge in renewable energy installations last year, driven by concerns over energy security and the need for affordable low-carbon power.

During this period, offshore wind dominated the UK’s renewables market, with an installed capacity of 3.2 GW in 2022 across three offshore wind farms, including the Moray Firth East (950 MW), Hornsea Two (1386 MW) and Triton Knoll (860 MW) projects.

On the other hand, onshore wind capacity was also installed across seven small-scale wind farms and a 50 MW South Farm Solar PV Project along with three small-scale energy-from-waste projects came online in 2022 while Tees Renewable Energy Plant (REP) in the Port of Teesside, one of the world’s largest biomass plants, is expected to come online in 2023 after experiencing several delays due to COVID.

Rebecca Groundwater, EIC’s Head of External Affairs, commented: “It’s necessary to have a strategic focus on offshore wind, solar, hydrogen and nuclear sectors to achieve net-zero by 2050 and meet the UK’s energy security needs. Maximizing the UK’s installed capacity of domestically sourced power is also critical to achieving energy independence and reducing dependence on Russian oil and gas.

This can only happen through enabling the energy industry as a whole and supporting its supply chain companies by ensuring speedy licensing processes and robust financing schemes are in place.”

Furthermore, the UK now has 44 operational offshore wind farms with a combined capacity of 14.5 GW, with approximately 2,679 wind turbines, based on the report. There are also more than 550 operational onshore wind farms in the country with a combined capacity of 15.2 GW with approximately 60 per cent of this capacity being in Scotland while the rest is spread across England, Wales, and Northern Ireland.

In lieu of this, the UK’s installed solar capacity is now up to 13.7 GW, across over 620 projects, approximately 46 per cent of this installed capacity comes from projects in England, with the country having an installed capacity of 6.3 GW across 559 operational solar plants.

Meanwhile, the UK’s installed capacity of energy from waste is now at 2.7 GW spread across 106 operational assets, 93 of which are in England with the remaining 13 situated in Scotland (eight projects), Wales (four projects), and Northern Ireland (one project). Additionally, the UK has an installed biomass capacity of 5 GW spread across 53 biomass plants, 2.6 GW of which comes from Drax’s Power Station in North Yorkshire.

Neil Golding, EIC’s Head of Market Intelligence, remarked: “Provided it can roll out the necessary policies and investment required to establish a resilient supply chain and a sizeable portfolio of operational projects, the UK has the potential to be a world leader in the global CCUS market.

“This could be a real opportunity for the UK to help other European countries decarbonise, particularly those that don’t have the necessary storage capacity, especially given the country’s well-established oil and gas supply chains and large offshore storage capacity in the North Sea.”

The report shows that the installed nuclear capacity in the country decreased due to the decommissioning of several reactors while coal-fired units were extended to ensure energy availability during winter. Between June and September 2022, the UK government extended the life of five coal-fired units into 2023 and 2024, including the West Burton A, North Yorkshire, and Ratcliffe coal-fired power plants.

The extended operations of these three power plants mean the UK now has approximately 42.7 GW of conventional power available across 93 power plants with around 82 per cent of this power being gas-fired, with the remaining 18 per cent coming from coal, oil, and diesel power plants.

Even though the government aims to increase nuclear capacity, the report points out that the industry faces some challenges, including high costs, and complex regulatory requirements, in addition to concerns over waste management and safety.

 “The government should also address the challenges in the nuclear power sector surrounding skills, development costs, and supply-chain capabilities to accelerate the transition towards a more secure and sustainable energy future,” concluded Golding.