Does DECC predict a post-2020 renewable slowdown?
According to today’s Financial Times (FT), official figures show that the number of new wind farms and other renewable energy projects constructed in the UK is heading for a sharp decline after 2020. But what do the figures tell us in more detail – and is a projected slowdown in renewables growth the result of government policy confusion?
The FT bases its story on figures the Department for Energy and Climate Change (DECC) last October. In an annex to DECC’s projections for future energy use and emissions from the energy sector, the government forecasts that the amount of new renewable power added to the grid will increase by around a factor of 10 up to 2020. But after then the rate of new power added will decline.
The FT suggests that rows within the government over renewables policy, particularly over onshore wind farms, may deter investment in renewable projects over the next two decades. It adds that the government could avoid a loss in investor confidence by introducing a 2030 decarbonisation target for the electricity sector.
Clarifying the projections – in pictures
Let’s look at what the figures on the expected new plant builds show in a bit more detail. The FT says the figures show growth in renewables will slow in the 2020s, with renewables’ share of annual electricity generation remaining stable at 34 per cent between 2020 and 2030.
The graph below shows how much power DECC expects to come from new power generation built between 2012 and 2030, in a scenario which uses mid-level estimates of economic growth and fossil fuel prices:
Image - rate of renewable actual (note)
Graph created by Carbon Brief using figures from Annex I of DECC’s updated emissions projections for October 2012 – total cumulative new capacity. Figures are from the central scenario.
As the graph shows, under this central scenario, new renewable power generation will be built between 2020 and 2030 – but at a much slower rate. In contrast, the rate of build of new gas power plant rises sharply during the 2020s.
Another way of looking at it is that currently about 80 per cent of the power from new plants is from renewable sources. By 2030 that will fall to 50 per cent.
The figures quoted in the FT are from only one out of five scenarios in the DECC report. But there doesn’t appear to be much difference between the levels of renewable build under the different scenarios, as our graph demonstrates:
Image - rate of renewable 5 scenarios (note)
Graph created by Carbon Brief using figures from Annex I of DECC’s updated emissions projections for October 2012 – cumulative new capacity from renewable sources across five growth and price scenarios.
The decarbonisation target
An unnamed DECC official tells the FT that the predicted slowdown in renewables growth is expected to happen partly a result of the closure of “some existing green power stations” in the 2020s – although it’s hard to see how that’s relevant, as the figures being discussed here relate to new build.
The official also attributes the slowdown in renewables growth to a lack of government targets for renewables after 2020. The government is required by a European Union target to increase the proportion of energy sourced from renewables in the UK to 15 per cent by 2020, but it doesn’t have any renewables target after that.
The FT seems to agree this is a problem, suggesting that uncertainty about UK energy policy, particularly continuing governmental arguments over the inclusion of a decarbonisation target for 2030 in the energy bill, is harming investment in renewables.
The government has said it will introduce a decarbonisation target into the bill – but it won’t make a final decision on the level of the target until 2016. There is still disagreement about whether or not the 2030 target would help incentivise investment. Guy Newey of the thinktank Policy Exchange told Carbon Brief that the 2030 target is a “sideshow” when the government’s focus should be on setting a long term European-level cap. Dr Rob Gross of Imperial College, on the other hand, told us the target is needed to fill the void as other incentives, such as the EU 2020 renewables target, expire.
The predictions don’t look like good news on the whole for renewables investors. While DECC told the FT that the predictions do not represent government targets or its preferred technology mix, it is perhaps telling that DECC is planning for a future where the rate of investment in new renewable plant slows down to be overtaken by gas as 2030 approaches.