Despite encouraging progress, we still have a long way to go if we are to meet the government’s challenging net zero targets, says Josh Bullard at Hydrock
This summer’s £1.5bn clean energy auction marked a significant milestone in the UK’s journey towards its 2050 net zero goals, funding 131 wind, solar and tidal power schemes that could eventually power 11 million homes. Such investment reflects Labour’s commitment to decarbonisation, generating optimism among developers and investors alike.
The UK has also become the first G7 nation to stop using coal-fired power, thanks to green energy. Labour’s ambitious goal of achieving 100% clean power by 2050 is inspiring, but can our infrastructure keep up? Achieving this target will require significant investment in renewable energy, grid-scale energy storage and upgrades to manage intermittent sources such as wind and solar.
Despite the progress, the pace of roll-out of renewables coupled with significant grid and planning constraints mean that renewables alone cannot yet meet the UK’s ambitious targets.
Renewables: a step forward, but gaps remain
The auction highlighted the strength of the UK’s clean energy sector, providing developers with guaranteed prices for clean electricity through the contracts for difference (CfD) scheme. However, beneath this success lies a complex policy landscape that will shape the sector’s future.
The CfD scheme stabilises revenue for renewable energy producers by guaranteeing fixed unit prices. It is currently under review as part of the review of electricity market arrangements (REMA), which aims to address long-standing inefficiencies in the UK energy market.
REMA presents several reforms that could potentially reshape funding for renewable projects. Future auctions will also be influenced by upcoming grid connections reform, set for full implementation by 2025, to better align energy connections with strategic energy planning and accelerate deployment.
Additionally, the Clean Power 2030 plan – a national framework to achieve clean electricity by 2030 – will further influence the sector’s direction of travel. As the UK scales up its clean energy efforts, these policies will play a pivotal role in determining capacity allocation and grid decarbonisation.
Yet, even as renewable energy capacity grows, gaps remain, especially when it comes to ensuring consistent supply. To fill these gaps, additional energy sources will be necessary.
One key complement is nuclear energy. Historically, the UK has treated nuclear and renewables as separate swim lanes, but a more holistic approach is vital.
Nuclear energy: a growing opportunity
Nuclear power is a reliable, low-carbon baseload source of energy that can stabilise the grid during dips in generation. By complementing renewables, nuclear can enhance energy security and provide a consistent power supply, as part of a wider energy mix, particularly during periods of high demand.
The establishment of Great British Nuclear (GBN) and the ambitious goal of delivering 24GW of new nuclear by 2050 reflect a significant commitment to harnessing this power source. Small modular reactors (SMRs) further offer an innovative approach to integrating nuclear energy into the UK’s energy mix, providing flexibility and scalability.
However, Ed Miliband’s recent remarks indicate that there is some further thinking needed before the government confirms the scale of its commitment to nuclear. While renewables remain a strong priority, embracing a more balanced energy mix could further strengthen the UK’s energy security, ensuring we meet our needs even during high-demand periods.
Recognising this potential, 14 of the world’s biggest financial institutions, including BNP Paribas, Barclays and Goldman Sachs, have highlighted the importance of nuclear energy. However, for these investors to commit, strong government support is essential to bolster confidence in the nuclear sector.
In parallel, while hydrogen is often discussed as a future energy source, its current production costs and energy intensity demonstrate that there are still important issues to address in the UK. Nuclear energy can facilitate the production of pink hydrogen through electrolysis, providing a stable and low-carbon electricity supply necessary for cost-effective hydrogen production.
Until electricity prices drop and the grid becomes more efficient, however, hydrogen will remain cost-prohibitive for widespread use. Therefore, at this stage, resources would be better spent accelerating grid decarbonisation and investing in nuclear infrastructure to support hydrogen production in the future.
Looking ahead: policy reform and future auctions
As we look to the future, market dynamics and policy reform will be crucial for the UK’s energy transition. A major bottleneck remains the grid, which requires rapid decarbonisation, transmission expansion and improved distribution.
Long duration energy storage (LDES) technologies are beneficial for grid stability during low renewable generation and reducing reliance on fossil fuels. However, without substantial investment, the transition will be delayed, prolonging dependence on carbon-intensive sources.
The upcoming AR7 and AR8 auctions for CfD will be critical but must provide greater certainty for developers and the supply chain. Simple yet impactful reforms, including adjusting auction parameters and extending CfD contracts from 15 to 20 years, could support long-term growth while ensuring the grid keeps pace with rising demand. Developers may gravitate towards power purchase agreements or private wire arrangements for more flexibility amid an uncertain CfD landscape.
While the Conservative government made strides in reducing greenhouse gas emissions and integrating renewables, more is needed for the UK to compete globally in clean energy. Labour’s decision to lift the ban on onshore wind was a step forward, but achieving “clean energy powerhouse” status demands more than just ambition – it requires smart, diversified policies that recognise the need for a true energy mix.
Chancellor Rachel Reeves’ industrial strategy emphasises the need for collaboration between the private and public sectors. By adopting a balanced approach that combines different energy sources, coupled with continued grid investment, the UK can secure its energy future. The establishment of Great British Energy will also be pivotal for driving innovation to meet the nation’s energy goals.
Josh Bullard is director of smart energy sustainability at Hydrock, now part of Stantec. He also sits on Bristol’s advisory committee on climate change.
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