A failure to ramp up deployment of renewable energy projects could cost UK consumers £2.6bn a year by 2025.
That is according to new research released yesterday by think tank Green Alliance, which argues that a policy freeze has stymied clean energy investment and development in the UK since 2015.
The paper says without a swift policy U-turn the government risks squandering the gains from its investment in renewables to date, which has helped drive a sharp reduction in the cost of wond and solar projects through programmes such as the Contracts for Difference (CfD) mechanism and the Feed-in Tariff.
Earlier this week the offshore wind industry shocked the energy world by delivering a 50 per cent reduction in the price of offshore wind energy in little more than two years. However, no similar auction for onshore wind and solar has been forthcoming, while other routes to deployment have been cut, despite widespread confidence in the industry that both technologies could also deliver sharp cost reductions.
“Since 2015, the UK has been cutting back on renewables just as they’ve become cheap, having previously invested heavily to bring down their costs,” Chaitanya Kumar, senior policy adviser at Green Alliance, said in a statement. “A smarter strategy would be to follow through on the earlier investment and buy more of this cheaper, clean energy, which would keep energy bills down and support new jobs in the renewables industry across the country.”
The Department of Business, Energy and Industrial Strategy (BEIS) was considering a response at the time of going to press.
Green Alliance claims there is a queue of 65TWh of renewable power capacity waiting to be developed in the UK, which could meet around 20 per cent of the UK’s consumption and could be built for less than the cost of new gas plants.
The report warns that without new mechanisms to bring these renewables technologies to market, such as a fresh round of CfD auctions, the UK will lose its route to decarbonising the energy system at least cost, as set out by the government’s climate watchdog the Committee on Climate Change (CCC).
Green Alliance suggests the price difference for building out the extra capacity the UK will need by 2025 using new gas capacity or new renewables will be £2.6bn a year in favour of renewables, assuming the government sticks to a carbon price consistent with delivering its carbon targets.
The CCC puts the guide carbon prices as £23 per tonne of CO2 in 2020, rising to £76 per tonne of CO2 by 2030.
However, even without adoption of “target consistent” carbon prices, renewables will still prove the cheapest form of new generation from the mid-2020s onwards, according to Green Alliance.