Learning the lessons for a highly renewable future

The last few months have been a busy time for UK energy policy. The government published its long awaited Energy White Paper, The Climate Change Committee produced its 1,000 pages of advice to the government on the level of the next carbon budget, and HM Treasury published its interim report on the costs of the net zero transition. And there’s more to come. Strategies on heat and buildings, hydrogen, industry, transport, and many others are all expected this year. Given all this activity, it’s worth pausing to recognise one thing that underpins this good work: an emerging consensus that by the 2030s the bulk of the country’s electricity will come from renewables.

Back in 2018, the Commission was clear that the UK should put itself on the pathway to a highly renewable system. The Commission has since recommended to government that by 2030 around 65 per cent of the country’s generation should come from renewable sources. Through a combination of sound government policy — initiated in the Electricity Market Reform package — and ambitious domestic and international action from industry, costs of renewables have plummeted. The government recently set out that it largely accepts the Commission’s recommendations for the sector and this level of renewable generation looks eminently deliverable.

The UK is an international leader in renewables deployment. It has the sixth largest capacity of wind and solar power in the world, and the highest offshore wind capacity of any country.¹ This has been delivered through clear policy setting direction and industry stepping up to deliver.

However, it’s not just the UK that’s taking ambitious action on renewables. There are many other countries or regions around the world that are following in the UK’s footsteps. The Commission has just finished a piece of work with Baringa investigating this.

Denmark, Spain, Ireland, Germany, and California all have at least 40 per cent of their generation coming from renewable sources. And whilst none of these systems are a like for like comparison with the GB power system — for example, the Danish system is much smaller, and the German system more connections with neighbouring markets — it is interesting to consider what has enabled renewable deployment in these areas. As part of the work, Baringa highlighted four key insights into the drivers of renewable deployment to date.

Insight 1: Clear and stable renewable policy has provided the right conditions for investment and the move to competitive auctions has successfully driven cost reductions.
Insight 2: System services are a fundamental requirement for renewable integration and clear signals, dynamic markets, and an environment that promotes innovation have supported a transition away from traditional service providers.
Insight 3: Cross-border connections and coordination have been valuable tools in renewable integration, reducing the need for other domestic flexibility options.
Insight 4: Integrated system planning and innovative asset development are helping to unlock greater levels of renewables.

And just like the UK, these regions aren’t done yet. All the locations mentioned above have set stretching targets for renewable deployment by 2030 (Figure 1). If these targets are achieved, in 2030 we’ll see a number of electricity systems around the world sourcing most of their electricity from renewable sources.

There are, of course, challenges to be overcome for the UK to deliver on its highly renewable future. Aurora Energy Research suggest that over £50bn capital investment will be required over the next decade for the government to deliver on its 40 GW of offshore wind by 2030 commitment.² And, as the White Paper in December highlighted, some reforms may be needed to ensure that the electricity market and associated policies remain fit for purpose. Some action will also be required to ensure that electricity grids with high levels of renewables on them remain operable.³ The government must look for insights from not just UK renewable deployment to date but from deployment in many regions around the world.

Given this international context, if the UK wants to maintain its standing as a global leader in renewable deployment, government ambition will need to be met with consistent delivery over the coming decade.

Figure 1: Existing renewable deployment targets for 2030 in case study regions