Earth, wind and (nuclear) fire: How Britain goes carbon neutral

"By 2025, the global renewables market will be worth $1tn."

by Andrew Saunders
Last Updated: 30 Oct 2019

In a recent feature, we explored the role of market forces in solving the climate crisis. But what's happening now, in the UK, and how much further do we have to go?

Wind

As an island surrounded by shallow seas, where a stiff breeze blows much of the time, it’s not surprising the UK is tapping in to this natural resource. While the future of tidal and wave energy remains unclear – the technology is less well developed than other renewables – Britain is a world leader in offshore wind electricity generation.

That lead comes down to economics as well as geography – the UK has encouraged international experts to develop the market, building 8.5GW of installed capacity and developing a supply chain that provides 11,000 skilled jobs. One company with such expertise is Danish pioneer Orsted, which built the world’s first offshore wind farm in 1991 and has 11 operational wind farms in the UK generating enough power for two million homes. It is also building two more: Hornsey 1 and 2 in the North Sea off Grimsby, which will be the world’s largest on their completion in 2022.

UK managing director Matthew Wright says, "Looking back in 20 years’ time, I think 2017 will be seen as the tipping point – the dawn of an entirely renewable power network when offshore wind really started to compete with fossil fuels."

Installation is still expensive and subsidies are required but the level has dropped much faster than most experts predicted. In 2015, the "strike price" of offshore wind – the price at which contractors could deliver power profitably – was around £117 per MwH. In the latest government auctions in May, it fell to around £58 and at least one industry analyst believes the next set of auctions could be the first to achieve zero-subsidy bids. 

Deirdre Cooper, portfolio manager at Investec, told Bloomberg recently that she expects bids to be "highly competitive with the wholesale price, as next- generation turbines are likely to be used which will reduce costs."

Offshore wind is now a rare climate-change bright spot, growing fast enough to hit the target of 50 per cent of total electricity generation set by the Committee on Climate Change. Its report prompted the government’s net-zero carbon emissions by 2050 commitment. "We can see a system where offshore wind would be providing about half the country’s energy needs by mid-century," says Wright.

Orsted is keen to increase the British-made content of its projects, which currently stands at around 40 to 50 per cent – blades are made in Hull, foundation attachments in Teesside and many of the towers in Scotland. "One of the things we are doing in the Humber cluster is partnering with the University of Hull to set up an innovation centre to help smaller businesses take a bigger slice," Wright adds.

But success will ultimately be about international trade. "As we have gone global, UK businesses have come with us on that journey," says Wright. "If they are suppliers to us here then it opens doors in other markets."

He adds the UK should be able to consolidate its lead in offshore wind: "From the perspective of UK plc, it’s about using the opportunity of being the first major economy to legislate for net zero."

Solar

Solar power in the UK has had a pretty bumpy ride. Not only has it had to cope with the UK’s notoriously cloudy skies, but also with the abrupt on again/off again nature of government support. The latter challenge has proved the hardest to cope with, according to Frans van den Heuvel, CEO of Solarcentury, the UK’s largest solar energy provider.

When the then new Conservative government got rid of the previously generous subsidies for solar power in 2015, 12,000 jobs were lost from the sector almost overnight and it seemed to sound the death knell for UK providers. "It was catastrophic," van den Heuvel says. "Most companies disappeared, some survived and one or two are now thriving."

Solarcentury is one of the fortunate few. Founded in 1998, it has constructed infrastructure (including the solar roof on London’s Blackfriars Station) with a generating capacity of more than 800MW, financed and developed utility scale projects generating c.1GW and has international schemes in the pipeline that will add a further 5GW to that total.

"Solar can be profitable in the UK on a parity [no-subsidy] basis. But in 2015 the UK accounted for 85 per cent of our revenues. Now it is only 7 per cent," says van den Heuvel. Instead Solarcentury concentrates its efforts on developing projects in the sunnier parts of Europe and South America. It is also moving into Africa, where it is installing solar power for a Unilever tea plantation in Kenya and a cocoa processing facility in Nigeria.

He believes the climate- change penny is starting to drop, not only with the public but crucially with investors: "We’ve reached a tipping point. Financial markets now see renewables as a better long- term bet for investment than fossil fuels and solar is now the most competitive source [of renewable energy] – it’s on a par with offshore wind."

So is the sun coming out again for UK solar? "By 2025 the global renewables market will be worth $1tn," van den Heuvel estimates. "In 2017, 55 per cent of that market was solar. We believe ecology and economy go hand in hand."

But winning that prize will require a more international and more collaborative approach than in the past. "After food, energy is the biggest market in the world and it is in transition," continues van den Heuvel. "To get to 100 per cent renewable energy, we will need to combine solar, wind, better electricity storage and IT to guarantee stable prices."

So if the commercial skies are finally clear, why has Solarcentury recently put itself up for sale? "We need a bigger owner," he admits. "The growth opportunities we see require so much money – our 5GW pipeline equates to $3bn at least."

Nuclear

Despite providing around 10 per cent of our power, nuclear is not a very popular guest at the renewable energy party. Many of the other attendees would prefer it wasn’t invited for fear of tainting the narrative with its reputational fallout.

This is a huge wasted opportunity, says Tom Greatrex, CEO of the Nuclear Industry Association. Nuclear, he points out, has comparably low carbon emissions and is highly complementary to wind and solar power because it helps to answer the question of what to do when there’s no wind and the sun isn’t shining.

"In June 2018, the time of year when demand is lowest, across Europe we were still burning coal for electricity," Greatrex says. "For almost a month, more than half our electricity came from fossil fuels – that’s a feature of the winter and it was simply because there was not much wind."

So why is nuclear so unpopular? Apart from the longstanding fears over safety (largely unfounded) and clean-up costs for waste and old reactors (very well founded), it’s mainly down to the unedifying spectacle of Hinckley Point C. Intended to be the first of a new generation of large, modern nuclear power stations, Hinkley looks increasingly like a £20bn white elephant that will end up saddling the UK taxpayer with some pretty expensive "cheap" electricity: £92.50 per MwH at 2012 prices, guaranteed for 35 years. Even the National Audit Office has concluded it’s a shockingly bad deal.

It comes down to money – getting a new reactor like Hinkley built in the UK requires finding private-sector investors who are rich enough to stump up 10s of billions of pounds and happy to wait a decade or more before they see a return. That there are vanishingly few of these around should not come as much of a surprise.

The problem is compounded by the fact that while the costs of wind and solar are falling much more quickly than many expected, the costs of nuclear remain stubbornly high. One solution is cleverer funding, such as the government’s proposed Regulated Asset Base model, in which consumers start paying before a plant is complete in return for cheaper prices in the long term. Another idea is innovative tech in the form of small modular reactors, which are much easier to fund and build at around $1bn each.

Will the sector’s other great hope, nuclear fusion, ever deliver? For decades fusion has been defined by hugely costly government-funded experiments that fail to yield results. But a more practical commercial approach is being taken by start-ups, says former chief scientific adviser Sir David King. "One of the most promising fusion companies is British – First Light Fusion. If it can demonstrate fusion, we might have the basis for machines that will cost perhaps 1 per cent as much."

Image (Hinkley Point) credit: Getty Images

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