FOOT OFF THE GAS Why the UK should invest in clean energy - arbon Tracker - Carbon Tracker Initiative
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
FOOT OFF THE GAS
Why the UK should invest in clean energy
February 2021
arbon Tracker
Initiative
About us About the Authors
Carbon Tracker Initiative is a team of financial specialists Bell Udomchaiporn1, Lee Ray1, Lily Chau1, Catharina Hillenbrand
making climate risk real in today’s capital markets. Our research von der Neyen1, with support from Alexander Engel2, Charles
to date on unburnable carbon and stranded assets has started a Teplin2, Mathias Einberger2
new debate on how to align the financial system in the transition 1
Carbon Tracker Initiative (CTI)
to a low carbon economy. 2
RMI
www.carbontracker.org | hello@carbontracker.org
This report is a collaboration between Carbon Tracker Initiative
and RMI, employing Carbon Tracker analysis and RMI’s Clean
Energy Portfolio Model.
RMI — an independent non-profit founded in 1982—transforms
global energy use to create a clean, prosperous, and secure low- The report has been authored principally by the Carbon Tracker
carbon future. It engages businesses, communities, institutions, team. The model has been adapted with ongoing advice from RMI.
and entrepreneurs to accelerate the adoption of market-based
solutions that cost-effectively shift from fossil fuels to efficiency
and renewables. RMI has offices in Basalt and Boulder,
Colorado; New York City; Oakland, California; Washington,
D.C.; and Beijing.
www.rmi.org
Readers are encouraged to reproduce material from Carbon Tracker reports for their own publications, as long as they are not being sold
commercially. As copyright holder, Carbon Tracker requests due acknowledgement and a copy of the publication. For online use, we ask
readers to link to the original resource on the Carbon Tracker website.
© Carbon Tracker 2021.
2 carbontracker.org
Acknowledgements Contact
Lee Ray (Carbon Tracker) lray@carbontracker.org
The authors would like to thank the following individuals and
organisations for offering their insights and perspectives on the
report. Their comments and suggestions were of great value:
Amanda Burton, Charles Moore (Ember), Jonathan Marshall
(ECIU), Andrew Grant (CTI), Kingsmill Bond (CTI).
Report design and typeset by David Casey.
This report was funded by the European Climate Foundation (ECF).
carbontracker.org 3
4 carbontracker.org
Contents
1. Key Findings ............................................................................................................................................ 6
2. Executive Summary .................................................................................................................................. 7
2.1 Investing in new CCGTs risks £9 billion ($13 billion) in potential asset stranding 7
2.2 A CEP is a cheaper alternative to new CCGTs offering the same grid services 8
2.3 Recommendations for investors and policymakers 9
3. Market Overview ...................................................................................................................................... 10
4. Why a CEP is a viable and least cost solution to the UK’s future energy needs ........................................... 14
4.1 A CEP is lower cost than new CCGTs and avoids £9 billion ($13 billion) in asset stranding 14
4.2 A CEP can match the power generation of CCGTs 15
4.3 CEP cost will fall further once storage comes down the cost curve 20
4.4 Conclusion 25
5. Recommendations for investors and policymakers ..................................................................................... 26
5.1 Embrace coal-to-clean instead of coal-to-gas and avoid £9 billion ($13 billion) in asset stranding 26
5.2 Level the playing field in the Capacity Market 26
6. Appendix ................................................................................................................................................. 28
6.1 Schemes to Promote Clean Energy Sources 28
6.2 Capacity Market 29
6.3 Proposed CCGT gas units to be built in the UK 30
6.4 Proposed OCGT gas units to be built in the UK 33
6.5 Average capacity factor of each hour of the day in each month 34
6.6 Key assumptions 35
carbontracker.org 51. Key Findings
Our analysis of clean energy sources compared to new gas • The UK capacity market disproportionately
plants in the UK illustrates that: incentivises and rewards new and existing gas power
capacity. If the government wants the UK to be a world leader
• UK investment in new combined cycle gas plants for
in green energy, which would support 60,000 jobs, it will need
this decade would be misguided. Our analysis shows that
to level the playing field for all resources in future auctions,
a combination of clean energy sources and flexible technologies
is not only cheaper than the 14 GW of slated new gas plants especially for demand side and storage technologies. Betting
but also offers the same level of grid services. By investing on new gas today means shouldering consumers with
in new gas, investors are exposing themselves to higher prices tomorrow as well as missing the net
stranded asset risk of £9 billion ($13 billion). Annual zero pathway the UK government has committed to.
emissions savings from forgoing new gas plants are
also relevant at 24 million tonnes of CO2, equivalent
to 7% of total emissions in 2019, enabling the UK to
better meet its net zero emissions target by 2050.
• The case for Clean Energy Portfolios (CEPs), a
combination of clean energy sources and flexible
technologies, is strong across different demand
outcomes. We tested a model to manage peak and non-peak
demand across the year and, although the contribution of the
CEP resources changes, it is shown to be capable of providing
the same grid services as a gas plant. We performed a cost
sensitivity to key inputs to show that CEP economics
are robust. We find that a 25% cost reduction in
battery storage would bring the overall cost of a CEP
down by 12%. Costs in a CEP are mitigated by the least-cost
substitution which takes place unlike for gas, which is wholly
exposed to gas prices.
6 carbontracker.org2. Executive Summary 2.1 Investing in new CCGTs risks £9bn1
($13 billion) in potential asset stranding
In this report we analyse the financial viability of new gas-fired New-build gas plants in the UK are no longer cost competitive
power plants in the United Kingdom. We compare the cost of when compared to clean energy sources, owing to the rapid cost
gas-fired power plants with those of a clean energy portfolio reductions in renewables. Even though the UK’s Climate Change
providing the same grid services (monthly energy, peak capacity, Committee recently recommended that the government commit
and flexibility). These CEPs combine clean energy technologies, to phase-out unabated gas by 2035, there are aggressive plans
including onshore wind, offshore wind, utility-scale solar to build over 14 GW of combined-cycle gas turbines2 in the
photovoltaics (PV), battery storage, energy efficiency, and UK over the next decade to compensate the capacity loss from
demand response elements to provide the same grid services as decommissioning coal and nuclear assets, which will see around
gas-fired power plants. We find that a CEP is already more cost 15 GW of capacity close by 2025. We find that a CEP is already
competitive than new combined-cycle gas plants (CCGTs) and cheaper than building new CCGTs whilst offering the same level
offers the same grid requirements as gas plants i.e., a CEP will of grid services. Figure 1 shows that a CEP outcompetes new
“keep the lights on”. Consequently, we find that investment in CCGTs already now when comparing the Levelised Cost of Energy
new CCGTs would not only be bad for emission goals but also (LCOE) for both. By 2030, the LCOE of a CEP is expected to drop
lead to comparatively higher electricity prices and would result to £41/MWh ($57/MWh), 39% cheaper than proposed CCGTs at
in stranded asset risk. £67/MWh ($93/MWh). That percentage widens to 60% by 2050.
Our findings highlight a relevant investment signal: by investing in
new CCGTs, investors are exposing themselves to stranded asset
risk3 of £9 billion ($13 billion).
1
All pound sterling amounts are converted from dollars using the spot FX rate of 1.38 from Bloomberg as of 11th February 2021
2
We are not aware of the current development pipeline of CCGTs incorporating carbon capture and storage (CCS) technology i.e., we understand these
to be unabated gas plants
3
Our definition and calculation of stranded assets is available under Key assumptions in the appendix. We discuss stranding in more detail in section 4
carbontracker.org 72.2 A CEP is a cheaper alternative to new CCGTs
offering the same grid services
To replace a CCGT, our analysis shows that a clean energy
portfolio, which combines multiple clean technologies whilst
offering the same grid services as a CCGT, would be composed of
26% of solar PV and 18% of wind nameplate capacity. Although
onshore wind makes up less of the CEP’s nameplate capacity
than solar PV in the portfolio, which might seem counterintuitive
given UK weather patterns, it provides more energy owing to
higher capacity factors (see section 4). The remaining capacity
is picked up by battery storage (27%), demand response (20%)
and energy efficiency (9%). Despite the comparatively high
cost of battery storage versus other CEP resources, it is integral
to complement solar and wind sources because of its ability
to manage extended peaks not covered by wind and solar
generation. Not surprisingly, during peak demand hours battery
storage provides a higher share of the required capacity (39%),
which is a result of the low availability from solar PV and onshore
wind sources coinciding with extended high demand periods.
Demand response stands out as a potential low-cost option
for fulfilling flexibility requirements, particularly in reducing the
amount of storage required. The different contributions from
each resource are optimised through detailed modelling to give
the least cost solution without sacrificing the grid requirements.
8 carbontracker.orgFigure 1. CEP LCOE vs proposed CCGT gas plant LCOE Figure 2. Contribution of each CEP resource to replace a 1,800-MW CCGT
18%
CAP: 1.1 GW
300 20% CF: 28%
CAP: 1.2 GW
250
LCOE ($/MWh)
200
150 9%
CAP: 0.6 GW
100
50
0 26%
27% CAP: 1.7 GW
10
12
14
16
18
20
22
24
26
28
30
32
34
36
38
40
42
44
46
48
50
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
CAP: 1.7 GW CF: 11%
CEP LCOE New CCGT LCOE
Wind (Onshore) Solar ES EE DR
Source: Carbon Tracker analysis coal-to-gas: new investments in gas capacity to partially fill
Notes: CAP: Nameplate capacity of each resource within a CEP. CF: Capacity any capacity gap left by the coal and nuclear phase outs will
factor of each renewable resource within a CEP. ES (energy storage), EE (energy unlikely be a least-cost solution over the investment payback
efficiency), and DR (demand response) period. Importantly, our analysis highlights that a CEP is not
only cheaper than new CCGTs but also offers equivalent grid
2.3 Recommendations for investors and services; ii) Reform the capacity market to ensure that gas is not
policymakers disproportionately rewarded at the expense of other resources:
this will ensure the grid does not overlook the least-cost option
Based on our analysis we see the following as important in
for the services required. These recommendations are discussed
avoiding potential stranded assets and helping the UK on its
in more detail later in the report.
path to net zero by 2050: i) Embrace coal-to-clean instead of
carbontracker.org 93. Market Overview
The UK power market is the third largest in Europe, behind in the government regarding security and reliability of power
France and Germany. Renewable energy, especially onshore supply left by this gap.
and offshore wind, has been gaining a significant share in gross
To counter the gap left by coal and nuclear resources there are
generation, with renewables overall representing 37% in 2019,
plans by developers to construct 14 GW of new CCGTs this
as reliance on hard coal sources declined. That said, the UK is
decade to ensure stability of power supply.
still heavily reliant on gas in its generation mix, which accounted
for 41% of gross generation in 20194.
The UK government has committed to a coal phase out by 2025,
although the government is consulting on the potential for this to
be brought forward by one year. This would mean around 6 GW
of remaining coal capacity disappearing mid-decade, although
share of power output is negligible at 10 years) the capacity gap is unlikely
to be resolved by nuclear this decade. This has raised concerns
4
https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/statistical-review/bp-stats-review-2020-full-report.pdf
5
Nuclear Power in the United Kingdom |UK Nuclear Energy - World Nuclear Association (world-nuclear.org)
6
Nuclear Industrial Strategy - The UK’s Nuclear Future (publishing.service.gov.uk)
7
Plan for new UK nuclear plant under intense scrutiny | Financial Times (ft.com)
10 carbontracker.org19. 20.
UK Power Plant locations 1. Meaford Energy Centre CC 299mw
16.
and pipeline capacity 2. Hirwaun Power Station GT 299mw
17.
3. Progress Power Station GT 299mw
4. Kemsley Paper Mill power station K4 68mw
5. Wrexham Energy Centre 299mw
6. Keadby power station 2 840mw
11. 7. Belfast Harbour Estate power station CC 480mw
7. 10. 8. King’s Lynn-B power station CC 1 850mw
9. King’s Lynn-B power station CC 2 850mw
10. Tees Combined-Cycle Power Plant CC 1 850mw
11. Tees Combined-Cycle Power Plant CC 2 850mw
12. Hillhouse Enterprise Zone Power Station 900mw
12. 13. 14. 15. 18.
power station CC 1
23. 6. 13. Eggborough power station CC 1 730mw
24. 21.
14. Eggborough power station CC 2 730mw
22. 15. Eggborough power station CC 3 730mw
16. Abergelli power station GT 299mw
1. 9.
8. 17. Millbrook Power Station power station GT 299mw
18. Eggborough power station GT 9 299mw
3. 19. Drax power station 5 Repower 1,800mw
5.
20. Drax power station 6 Repower 1,800mw
21. VPI Immingham power station B 299mw
22. West Burton power station C 299mw
2.
23. Ferrybridge power station D CC 1 1,100mw
24. Ferrybridge power station D CC 2 1,100mw
4.
carbontracker.org 11Residential and, to a lesser degree, industrial consumers are The UK was the first G7 country to commit to a net zero carbon heavily reliant on gas for their cooking and heating, and process emissions target by 2050. The current pipeline of new CCGTs, if heating needs, respectively. Around 80% of residential consumers they were to go ahead, would seem to contradict this long-term and over half of UK industrial users, especially in the steel, glass, goal given the associated emissions of unabated gas plants and is and chemical sectors, rely on gas power8. The UK government at odds with the proposals of the UK’s Climate Change Committee perceives gas power as an unreplaceable, reliable, and secure which recently recommended that the government commit to source of energy, especially in peak periods like winter, even phase-out unabated gas by 203510. Indeed, justifications by the though the majority of the natural gas used to fire the plants is government for permitting future gas plants mainly rest on a imported, exposing the system to import risk and users to volatile combination of new and expensive carbon capture and storage energy prices. For example, in 2019 the UK imported 54% of its technologies and blending green hydrogen with existing methane, gas needs, with LNG representing 21% (of total gas supply), much both of which are unlikely to be a meaningful contributor this of which comes from Qatar and Russia9. This import-dependency decade11. We highlight that given a CEP is already cost competitive makes the UK vulnerable to potential supply disruption and, in with new CCGTs, the economics of abated gas plants and green the case of LNG, exposes the UK to global price patterns (instead hydrogen, which was not included in our analysis, would likely of regional ones), given available volumes of LNG deliveries to make CEPs stack up even more favourably against new gas plants Europe are heavily influenced by Asian demand and pricing. because of the additional cost involved. 8 Shaping the future of UK gas markets | National Grid Gas 9 Diversity and security of gas supply in the EU, 2019 (publishing.service.gov.uk) Sector-summary-Electricity-generation.pdf (theccc.org.uk) 10 Gas Grids Plot Course for U.K.’s First Hydrogen Town by 2030 - Bloomberg 11 UK should target two-thirds of power from renewables by 2030: key infrastructure body | Recharge (rechargenews.com) 12 carbontracker.org
The National Infrastructure Commission, a key governmental pot in the Contracts for Difference auction, given the potential
adviser, has recommended increasing the UK’s renewable risk of competition if put in the same pot with more established
electricity target from 50% to 65% by 2030 owing to sharp cost onshore wind and solar PV sources15.
reductions12. The Contracts for Difference (CfD) scheme, which
Learning rates of renewable technologies are bringing down costs
was introduced to incentivise investment in large scale low-carbon
faster than expected (witness the previous decade as a case in
electricity generation, has a target to support up to double the
point), and is a global trend which is likely to continue to abound.
capacity of renewable energy in the next auction (late 2021).
Conversely, gas prices are forecast to increase this decade
The auction will be open to onshore wind, solar PV, and other
according to BNEF. We show that a CEP is not only already the
established technologies, as well as offshore wind. Subject to
least cost solution compared to new gas, but also offers the same
sufficient projects coming through the planning pipeline to
grid services as a new gas plant. By betting on new gas today the
maintain competitive tension, the government expects to deploy
UK risks missing its emissions targets by veering away from a net
around 12 GW of low-cost renewable generation. Specifically,
zero pathway, avoids the least cost energy solution, and penalises
under the government’s Ten Point Plan for a Green Industrial
consumers as they will be the ones to bear higher electricity prices.
Revolution the UK has chosen to capitalise on the country’s
favourable coastline and extensive offshore wind resources
by investing in and prioritising offshore wind generation, with
capacity expected to quadruple to 40GW by 203013,14. Although
we note at the current pace of development, the cost of offshore
wind is still not low enough to be chosen as part of a CEP, such
a government policy is likely designed to drive cost reductions
through economies of scale. Therefore, it is possible in the near
future offshore wind resources could be chosen as part of a CEP.
The comparatively higher cost is also reflected in the government’s
recent decision to place offshore wind technologies as a separate
13
https://www.gov.uk/government/news/green-industrial-revolution-in-sight-as-government-sets-out-plans-for-more-clean-energy
14
https://www.gov.uk/government/publications/energy-white-paper-powering-our-net-zero-future/energy-white-paper-powering-our-net-zero-future-
accessible-html-version
15
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/937634/cfd-proposed-amendments-scheme-2020-
ar4-government-response.pdf
carbontracker.org 134. Why a CEP is a viable and least cost solution
to the UK’s future energy needs
We assess the economics of gas and clean energy using the RMI energy, top 50 hours of peak net load17, and provide the same
Clean Energy Portfolio Model16. The model estimates the grid level of grid flexibility18 of the gas plant to be considered. Our
services of the proposed gas plant, optimising a clean energy analysis shows the composition of least-cost portfolios of clean
portfolio to replicate the gas plant, and compares the LCOE of energy resources that can provide the same grid services at a
each source. The clean energy portfolios can include offshore lower cost than a proposed natural gas-fired power plant.
wind, onshore wind, utility-scale solar, battery storage, efficiency Bottom line: A CEP can provide the same grid services as
measures, and demand response programs. It is salient to point new gas, but at lower cost.
out that clean energy portfolios must at least match the monthly
4.1 A CEP is lower cost than new CCGTs and avoids £9 billion ($13 billion) in asset stranding
Figure 3. CEP LCOE vs proposed CCGT gas plant LCOE
300
250
LCOE ($/MWh)
200
150
16
https://rmi.org/insight/clean-energy-portfolios-pipelines-and-
100 plants/
17
Peak net load is defined as the amount of power needed
50 less the amount of energy expected from renewable generation
(distinct from the CEP)
0 18
Flexibility of the CEP must match or exceed the gas plant’s
nameplate capacity during the hour when the region experiences
10
12
14
16
18
20
22
24
26
28
30
32
34
36
38
40
42
44
46
48
50
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
its greatest one-hour increase in net load. Further, the model
CEP LCOE New CCGT LCOE requires that non-solar resources are able to compensate for the
largest four-hour drop in solar generation
Source: Carbon Tracker analysis
14 carbontracker.orgFigure 3 shows 2020 was a tipping point for clean To calculate the potential stranded value we take a capex/MW
energy portfolio economics with LCOE of CEPs and new of £640,000 ($880,000), as estimated by BNEF, as a proxy for
CCGTs both at £60/MWh ($83/MWh). Our analysis shows investment cost. We acknowledge this is a simple approach, but
a steadily declining LCOE curve for a CEP, from a deployment this value is meant to inform investors of the volume of assets at
cost of £182/MWh ($252/MWh) in 2010 dropping by 67% to risk and the potential impairment of an asset that is theoretically
£60/MWh ($83/MWh) in 2020. CEP costs will continue to fall. stranded from day one. It is also meant to inform company
By 2030 the LCOE of the CEP is expected to drop to £41/MWh management of the financial risks of investing in new gas plants at
($57/MWh). This contrasts with the LCOE for a new CCGT which a time when much of the global generation fleet is decarbonising.
is expected to increase to £67/MWh ($93/MWh) by 2030, a We understand that some of these new gas plants will likely go
63% premium to the CEP. This is unsurprising because unlike the ahead regardless. In this context, the inflection point at which
new CCGT, a CEP is not subject to fuel and carbon prices19. Gas these new plants would be stranded is when the LCOE of the
prices are forecast to increase this decade according to BNEF. In CEP is below the Long Run Marginal Cost (LRMC) of the gas plant
addition, we expect carbon prices to rise from current levels. On in operation. At this point, market competition will drive plant
the other hand, cost reductions in renewable sources is a global closures while book value remains, leading to asset write-offs.
trend which is forecast to continue as clean technologies are
deployed along learning rates. 4.2 A CEP can match the power generation of
As we outline above, the inflection point, when a CEP outcompetes
CCGTs
a new CCGT, has already happened. Consequently, our findings We select a 1,800 MW gas plant as the representative plant to
highlight a dominant investment signal: by investing in new be replaced by a CEP. This plant is assumed to function primarily
gas, investors are exposing themselves to potential as a load following plant, although we highlight that if it were to
stranded asset risk of £9 billion ($13 billion). Annual operate as a baseload plant, a CEP could match the output at
emissions savings from forgoing new gas plants are also lower cost.
relevant at 24 million tonnes of CO2, equivalent to 42%
of total emissions from power plants in 2019 and 7% of
total UK emissions20. Note: a table of every proposed CCGT
along with the stranding year is available in the appendix.
19
Carbon prices assumption is available under Key assumptions in the appendix
20
2019 UK greenhouse gas emissions, provisional figures (publishing.service.gov.uk)
carbontracker.org 15According to Carbon Tracker’s analysis using the ENTSO-E unit- months of January, and May to July. In the other months, the CEP
level generation data, the average capacity factor of CCGTs was could generate more energy than the gas plant at certain times.
around 50% in 2019, with the highest production in January As a low cost producer, it is possible that lower cost energy from
followed by May to July. Per figure 4, our analysis finds that a CEP could displace higher cost energy from other sources, and
the equivalent CEP would be composed of 26% solar and 18% thus be sold to the system, but to be prudent we do not ascribe
onshore wind nameplate capacity, as their production patterns any value to it.
complement each other with solar more available in the warmer
Figure 4. Contribution of each CEP resource to replace a 1,800-MW
months when there is less wind availability. Onshore wind CCGT in the UK
makes up less of the CEP’s nameplate capacity than solar PV in
the portfolio because it provides more energy owing to higher
18%
capacity factors. Although offshore wind in the UK generally CAP: 1.1 GW
exhibits a higher and more stable capacity factor than onshore 20% CF: 28%
CAP: 1.2 GW
wind, and the government has put this at the forefront of its 2030
renewables target, its cost, at the current pace of development,
is still not low enough to be chosen as part of the least-cost
clean energy combination. Nevertheless, we acknowledge such 9%
CAP: 0.6 GW
a government policy is likely designed to drive cost reductions
through economies of scale as well as bringing wider economic
benefits not captured by the model. Therefore, it is possible in
the near future offshore wind resources could be chosen as part 26%
27% CAP: 1.7 GW
of a CEP. Much of the remaining capacity is picked up by battery CAP: 1.7 GW CF: 11%
storage (27%) and demand response (20%) to account for periods
of unavailability from solar and wind generation and, in the case
Wind (Onshore) Solar ES EE DR
of storage, mainly providing capacity during peak net load hours
when other resources are unavailable. This selection of clean
Source: Carbon Tracker analysis
energy amounts to 6.3 GW of nameplate capacity. Nameplate
capacity of the CEP is higher than that of the representative Notes: CAP: Nameplate capacity of each resource within a CEP. CF: Capacity
factor of each renewable resource within a CEP. ES (energy storage), EE (energy
gas plant to reflect the need to match output in the challenging
efficiency), and DR (demand response)
16 carbontracker.orgAs shown in Figures 5 and 6, most of the UK’s top 50 peak
net load hours, which are determined by extrapolating hourly
national demand profiles and subtracting forecasted generation
from renewables, happen in winter (mainly January) during late
afternoon to early evening.
Figure 5. Season of top 50 hours peak net load
Figure 6. Time of top hours peak net load
50
20
45
18
40
16
Count of net peak hours
Count of net peak hours
35
14
30
12
25
10
20 8
15 6
10 4
5 2
0 0
Spring Summer Autumn Winter Night Late Early Late Early Late Early Evening Night
night morning morning afternoon afternoon evening
Source: Carbon Tracker analysis on 2019 Gridwatch UK hourly load data
The UK’s hourly peak net power load shows not only timing meeting peak daily demand although, as can be seen, for any
of peak, but also the number of consecutive peak hours. In given point in time, the contribution of these different sources to
2019, the top 50 peak net hours fell on only 13 days of the fulfil actual demand is quite different from capacity installed. We
year, meaning many of the hours followed each other within observed four peaks of five to 13 hours and seven peaks of two
a day. As shown in figure 7, all five technologies contribute to to four hours.
carbontracker.org 17Figure 7. Peak demand requirement of replacing a 1,800-MW CCGT in the UK
Solar Wind (Onshore) ES EE DR CCGT output
2
1.8
1.6
Peak power output (GW)
1.4
1.2
1
0.8
0.6
0.4
0.2
0
0102
0102
0102
0102
0103
0103
0103
0103
0103
0120
0120
0122
0122
0122
0123
0123
0123
0123
0123
0124
0124
0124
0124
0124
0124
0124
0124
0124
0124
0124
0124
0124
0130
0130
0130
0130
0130
0130
0130
0131
0131
0211
0211
0211
0318
0318
1106
1129
1129
1217
Day of net peak hour
Source: Carbon Tracker analysis
These are challenging periods for renewable energy sources to storage contributes almost 40% of delivered electricity with
meet demand given the mismatch between lower power output demand response accounting for a further 23%, while onshore
from wind and solar and higher demand from users. Figure 8 wind only makes up around 10%. Energy efficiency, representing
illustrates the average share of different clean energy resources 27%, picks up the remainder. The high potential for energy
required to provide equivalent services of a CCGT during the efficiency reflects the old building stock in the UK, which could be
top 50 peak net hours in the UK. To replicate the nameplate made more efficient through measures such as better insulation
capacity during the top 50 peak net load hours of a gas plant, to reduce heating needs and more efficient lighting to reduce
capacity and flexibility dominate the CEP selection: battery power demand.
18 carbontracker.orgFigure 8. Contribution of each cep resource to replace a 1,800- are separated into space heating and water heating), whose
MW CCGT during net peak hours in the UK production profiles we estimate from data provided by Hotmaps21.
Battery storage is exclusively chosen as a capacity resource,
1%
CAP: 0.03 GW 9% providing capacity when renewable generation is unavailable,
23% CAP: 0.2 GW mirroring the high ramp-up speed of the gas units to fulfil the net
CAP: 0.4 GW peak capacity requirement. The nature of consecutive net peak
hours adds to the need for battery storage, as the CEP model
typically selects batteries with increased power output capacity
(to meet demand when solar and wind do not contribute) and
increased duration (to meet demand across multiple hours on the
39% same day)22. Battery storage contributes heavily during these 50
CAP: 0.7 GW hours, except for 16 hours where onshore wind and/or demand
27% response can share some of the load burden.
CAP: 0.5 GW
It is also worth highlighting that, although not included in the
analysis, the UK’s expansion plan for electricity interconnectors23
Wind (Onshore) Solar ES EE DR
is potentially an additional source of flexibility which could provide
support for CEPs. According to National Grid24, by 2024 there
Source: Carbon Tracker analysis will be at least six interconnectors and 7.8 GW of power available
between Great Britain and Europe. This is sufficient to supply 25%
Note: CAP: Capacity of each resource within a CEP to fulfil top 50 net peak
capacity requirements
of domestic electricity requirements. Our analysis highlights
the important fact that a CEP is capable of matching
The efficiency and demand flexibility components of the power output from a gas plant for both monthly average
representative plant are a mix of different sectors and end load as well as during net peak hours.
uses (industrial, commercial, and residential; the latter two
21
https://www.hotmaps-project.eu/
22
A list of battery storage used in the model is available under Key assumptions in the appendix
23
Electricity interconnectors connect the electricity systems of neighbouring countries and enable surplus power, such as that generated from wind and
solar farms, to be traded and shared between countries, thus avoiding wastage
24
What are electricity interconnectors? | National Grid Group
carbontracker.org 194.3 CEP cost will fall further once storage comes The falling cost for a CEP from 2010 to 2020 was primarily
down the cost curve driven by declines in the cost of solar PV and onshore wind:
according to BNEF, since 2014, solar and onshore wind LCOE
Cost reduction in renewable sources is a global trend which declined 77% and 48%, respectively. Future cost reductions in a
we expect to continue this decade as clean technologies are CEP are driven mostly by falling battery prices.
deployed along learning rates. Almost half of the CEP cost is
driven by battery storage given the need of fulfilling capacity
requirements.
Figure 9. Levelised cost of energy for each technology ($/MWh)
PV non-tracking Wind (offshore) Wind (onshore) Untility-scale battery (4h)
250
200
150
100
50
0
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
Source: BNEF
20 carbontracker.orgAlthough deployment and commercialisation of new battery Offshore wind, although included in the analysis, was not
storage technologies has already led to sharp cost reductions, selected owing to higher costs at the current pace of cost
overall costs remain high relative to competing energy sources. development, although it is possible this will change in the near
This is expected to change with further cost reductions forecast future as offshore wind is deployed along learning rates. Given
this decade by BNEF owing to technology advancements leading the UK government is prioritising offshore wind development
to longer lifetimes and performance, and lower manufacturing regardless, it is possible that other components of the CEP
costs. According to BNEF, the capex of a 4-hour battery in the could be included at relatively low additional cost in light of
UK will drop from £0.22m/MW ($0.3m/MW) in 2020 by 30% to the comparatively high capacity factors of offshore wind versus
£0.15m/MW ($0.21m/MW) in 2025. By 2030, the cost declines other generating resources.
further by 43% to £0.12m/MW ($0.17m/MW). We note that
Not surprisingly, CCGTs are extremely vulnerable to fuel price
forecast cost reductions by BNEF appear conservative relative to
increases: a 25% increase in the gas price results in an additional
history based on the view that learning rates are constant and
£8/MWh ($11/MWh) cost saving when switching to a CEP. This
thus offer good predictive power25.
also highlights the risk of betting on gas; gas prices are volatile,
To better understand the main drivers of the cost of both CEPs and as has been seen recently with sharp price rises; renewable
CCGTs, we performed a sensitivity analysis by applying a +/- technologies continue to fall in cost and this is a trend which is
25% change to material cost inputs and examined incremental unlikely to change.
cost savings achieved by building a combination of clean energy
Importantly, because of the substitution between clean energy
resources instead of a gas plant, as shown in figure 10. The cost
resources in a CEP to select the least-cost option, changes to
savings metrics essentially represent the difference between the
costs of individual resources can be mitigated at the investment
LCOE of a CEP and that of a CCGT.
planning stage. For example, if onshore wind is assumed to be
On the CEP side, as outlined above, the most relevant cost is more expensive, the model may substitute offshore wind if it is
storage. We find that a 25% cost reduction in battery storage now comparatively cheaper. This is not possible with a gas plant
would bring the overall cost of a CEP down by 12% giving an which is wholly reliant on non-substitutable gas as a fuel source.
LCOE of £53/MWh ($73/MWh) instead of £60/MWh ($83/
MWh).
25
Wright’s Law is the best way to predict the future (canadiancor.com)
carbontracker.org 21Figure 10. Sensitivity of CEP economics to 25% change in cost components
25% increase in cost 25% decrease in cost
Average cost savings by replacing a CCGT with a CEP ($/MWh)
-12.0 -8.0 -4.0 0.0 4.0 8.0 12.0
Wind -5.0 5.0
Solar PV -3.2 3.2
Cost Component*
Energy storage -10.9 10.9
CEP
Energt efficiency -3.5 3.5
Demand response -0.4 0.4
Gas price -10.5 10.5
CCGT
Carbon price -5.8 5.8
Source: Carbon Tracker analysis
*Cost component: costs of onshore wind, solar PV and battery storage consist of capex and fixed O&M cost; cost of energy efficiency consists of capex only; cost of
demand response consists of capex as well as fixed and variable O&M costs.
Although this report focuses on CCGTs, we performed analysis advancement, building a CEP will not be cheaper than building
on OCGTs despite their comparatively low proportion in the new turbines before 2036 (see figure 11) because of the high
UK’s planning pipeline (7 units, 2.1 GW in total compared to capacity and flexibility requirements and low capacity factors.
14.3 GW of proposed CCGTs). The average capacity factor The low capacity factors lead to high levelised costs, as the high
for OCGTs in the UK was around 10% in 2019 based on the capital cost is spread over a small amount of electricity output. It
ENTSO-E record, given their use primarily as a peak load is this low amount of electricity produced which serves as a base
plant. Our analysis suggests that, at the current state of cost for comparison as the model looks at a specific constraint in
22 carbontracker.orgfunction of the capacity to be replaced. This, and the important
capacity requirement when these units meet peak load, drive up
the cost of a CEP. The analysis looks at the stranding of OCGTs
from a cost and capacity perspective, although capacity and
ancillary service markets will likely continue supporting the fossil-
fueled peakers.
Figure 11. CEP LCOE vs proposed OCGT LCOE
CEP LCOE New OCGT LCOE
800
700
600
LCOE ($/MWh)
500
400
300
200
100
0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
Source: Carbon Tracker analysis
carbontracker.org 23As is the case with CCGTs, battery storage cost reduction has Figure 12. Contribution of each cep resource to replace
the biggest effect in pushing a CEP down the cost curve in the a 299-MW OCGT in the UK
context of OCGT substitution. As shown in figure 12, a CEP
that would substitute a 299-MW OCGT is split mainly between 2%
battery storage (49%, 432 MW) and demand response (24%, CAP: 18 MW
CF: 28% 20%
207 MW), together with energy efficiency (5%, 44 MW) taking up CAP: 173 MW
24%
almost 80% of the portfolio to provide capacity. The remaining CAP: 207 MW CF: 11%
22% goes mostly to solar PV (20%, 173 MW) with onshore
wind showing a very small contribution at merely 2% (18
MW), because OCGTs produce very little energy, these energy
producing resources are less useful. 5%
CAP: 44 MW
49%
CAP: 432 MW
Wind (Onshore) Solar ES EE DR
Source: Carbon Tracker analysis
This selection of clean energy amounts to 870 MW of nameplate
capacity.
In the case of those OCGTs which exclusively fulfil part of the
UK’s top 50 peak net load requirements, the need for capacity
and flexibility is even more pronounced. Our analysis suggests
battery storage would represent 68% of an equivalent CEP with
demand response accounting for a further 23%. Battery storage
is important as it can instantaneously fulfil peak demand in a
similar way to OCGTs.
24 carbontracker.orgFor the case of a 299-MW OCGT assumed to be commissioned
in 2023, we calculate a LCOE of £200/MWh ($276/MWh).
The corresponding overall replacement CEP cost is expected to
decline from £238/MWh ($328/MWh) in 2020 to £68/MWh
($94/MWh) by 2050, or 36% less than the cost of building new
OCGTs.
4.4 Conclusion
Our analysis shows that a clean energy portfolio is able to
provide the equivalent grid services of a new CCGT at lower
cost. We assume that these proposed gas plants will be built
to function primarily as load following plants, although we
highlight that if they were also to operate as a baseload plant, a
CEP could match the output at lower cost. Therefore, we find that
a CEP could replace coal and nuclear plants, which are being
phased out this decade. This analysis underlines the ability
of a CEP to “keep the lights on” and the potential to
avoid billions in stranded assets and prevent millions
of tonnes of unnecessary emissions of CO2 by investing
in CEPs.
carbontracker.org 255. Recommendations for investors and policymakers
5.1 Embrace coal-to-clean instead of coal-to- would save £9 billion ($13 billion) in potential stranded assets
gas and avoid £9 billion ($13 billion) in asset and 24 million tonnes of CO2 emissions annually, equivalent
stranding to 7% of total 2019 emissions, enabling the UK to better meet
its net zero emissions target by 2050.
The UK committed to retiring all coal-fired power plants by
2025 at the latest, although the government is consulting on 5.2 Level the playing field in the Capacity Market
the possibility of bringing this deadline forward by one year.
The UK has aggressive plans to build over 14 GW of combined- The UK government views gas as the only counterweight to
cycle gas turbines over the next decade to compensate the non-dispatchable renewable production to ensure the system
capacity loss from decommissioning coal and nuclear assets, maintains its levels of safety and security given the imminent
which will see around 15 GW of capacity close by 2025. New loss from coal and nuclear capacity. We find that a CEP can
investments in gas capacity to fill any capacity gap left by the already provide the same grid services for lower cost than a new
decommissioning of these assets will unlikely be a least-cost CCGT. The government introduced the capacity market as part
solution over the investment payback period (estimated to be of its Electricity Market Reform policy to manage the security of
35 years in the model). The UK government perceives gas as a future power supplies at the lowest cost to consumers. This has
reliable and secure source of energy, especially in peak periods had the effect of disproportionately rewarding fossil fuel (mainly
like winter, even though much of the natural gas used to fire the gas) capacity. For example, capacity market auctions for the
plants is imported exposing the system to import risk and users delivery years from 2018/19 to 2023/24, saw total payments
to volatile energy prices. Importantly, our analysis highlights made to existing and new CCGT plants of £2.3 billion ($3.2
that a CEP is not only cheaper than new CCGTs but also offers billion). Meanwhile, the share of battery storage and demand
equivalent grid services (monthly energy, peak capacity, and response among the awarded capacity was only 0.5% and 2%
flexibility) i.e., CEPs can provide the same grid services as new respectively, as opposed to more than 40% for CCGTs.
gas plants at lower cost. The UK should therefore consider
replacing retiring coal plants with a CEP rather than new CCGTs
and go coal-to-clean instead of coal-to-gas. We calculate this
26 carbontracker.orgThe government needs to level the playing field for clean energy As we show, the combination of clean energy sources in a CEP
sources to compete which will ensure the grid does not overlook is greater than the sum of its parts, owing to the complementary
the least-cost option for the services required. As our analysis nature of the resource combination. By ignoring a portfolio of
highlights, energy storage and demand response are key clean resources the capacity market risks missing out on the
components of CEP alternatives to CCGT units. Although the UK optimal low-cost solution.
government has made positive changes to the capacity market
in favour of including more renewables and removing additional
hurdles for battery projects larger than 50 MW, more needs to
be done to promote longer duration storage at scale to reflect
changing market requirements and enable a more meaningful
contribution from this technology. In addition, demand response
is permitted to prequalify for all delivery lengths, but this is subject
to meeting minimum capex thresholds, which are often difficult
to meet given the low capex nature of demand response. The
current capacity market continues to disproportionately reward
gas power and runs contrary to the UK’s goal to decarbonise the
power sector. In its annual report26, RWE pointed to the fixed 15-
year capacity payment remuneration for the King’s Lynn plant it
bought in February 2020 to comfort investors. This reality also
deters further investment in battery storage.
26
RWE (2020) https://www.group.rwe/-/media/RWE/documents/05-investor-relations/2019-Q4/20-03-12-RWE-annual-report-2019.pdf
carbontracker.org 276. Appendix For the 2021/22 provision, a total of 125.4m ROCs have been
awarded in the UK. The ROCs are calculated by applying the
banding level for that technology to their generation.
6.1 Schemes to Promote Clean Energy Sources The RO scheme closed to new capacity on 31 March 2017.
Renewable energy stations are accredited for 20 years.
The Renewables Obligation 27
The Renewables Obligation came about in April 2002 placing Contracts for Difference 28
an obligation on UK electricity suppliers to source a quota of their CfDs are currently the main support mechanism for renewable
supply from renewable sources. This entitles them to Renewable energy in the UK; they are a price discovery system which
Obligation Certificates (ROCs) which they need to present to determines a strike price through auctions. Generators who win
Ofgem, the electricity regulator. ROCS can also be bought from a CfD are compensated the difference per MWh to the market
the renewable generator directly, providing an assured income price, but if the market price goes higher than the strike price,
stream to the renewable generator. Banding was introduced generators must pay back the difference. The contract provides
in 2009 to support the differing needs of renewable energy long term certainty in revenue streams for investors, while the
technologies. Prior to the introduction of banding 1 ROC was subsidy cost to consumers is kept within strict limits.
awarded for 1 MW of renewable energy.
The auction mechanism works as follows: the government sets
The RO is still in play though greatly reduced. The number of a technology-specific target of capacity and budget. Renewable
ROCs that electricity suppliers are required to produce during generators that meet the eligibility requirements can apply for
the 2021/22 obligation period will be: a CfD by submitting a ‘sealed bid’. The strike price is then
determined by the maximum price that exhausts the set budget
• 0.492 ROCs per MWh in Great Britain (England, Wales, and
or the capacity limit. Projects that are competitive with the strike
Scotland); and
price win the CfD.
• 0.194 ROCs per MWh in Northern Ireland.
27
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/923126/renewables-oglibation-guidance-
note-2021-22.pdf
28
BEIS (2020) https://www.gov.uk/government/publications/contracts-for-difference/contract-for-difference
28 carbontracker.orgTo date, three auctions, together with the bespoke early-days CfD response “DSR” may also participate and is classified as “Proven
contracts, have awarded support to over 16 GW of new renewable DSR” or “Unproven DSR” following a test.
electricity capacity projects across technologies. The government
The Demand Curve for the auction is sloped so that as more
plans to open the fourth allocation round in 202129.
capacity is procured, the price descends. There are multiple
The government’s recently announced pledge to drive investment ‘rounds’, starting at a price cap and reducing incrementally. The
in renewable energy includes setting a target to support up bids represent an obligation to supply power at a specific time
to double the capacity of renewable energy in the next 2021 or face a penalty. Auctions cover a four-year time (T-4 Auction)
CfD auction with the aim of “providing enough clean, low cost topped up by an auction one year before the delivery period
energy to power up to 10 million homes.”30 After being excluded (T-1 Auction.) Prospective Capacity Providers must meet certain
since 2016, onshore wind and new solar power projects will eligibility requirements and prequalify before they can participate
now be able to enter the CfD auction again.31 The government in the CM auctions. According to Ofgem’s report on the
is reviewing feedback from the consultation aiming at a CfD 2018/2019 auction, the final number of prequalified CMUs for
market reform. Proposed amendments include pot allocation the T-4 Auction was 396, totalling 57.6 GW of de-rated capacity.33
of fixed-bottom offshore wind, strike price determination for
More than half (56%) of the capacity acquired through the 2018
floating offshore wind, delivery year extension to 2030, flexibility
T-1 Auction was gained by CCGTs, which totalled approximately
of auction budgets, and clarity around battery storage co-
2 GW. Interconnector capacity accounted for approximately 1
located with renewables.
GW (28%), this was followed by waste capacity at 265 MW (7%)
and DSR capacity at 195 MW (5%). Biofuel, coal mine methane,
6.2 Capacity Market32
diesel and storage battery accounted for approximately 110 MW
The capacity market is a scheme providing an additional revenue (~3%). Wind and solar were not included although renewables
stream for generators to provide a back-up service to ensure are now permitted to participate in capacity market auctions.
security of supply. Generators that are currently operational
During the past decade, battery storage in the UK has caught
or investing in an existing asset (‘Existing’ or ‘Refurbishing’)
the attention of policy makers, grid operators and developers.
and new generators and interconnectors (‘New Build’) bid for
In particular, the capacity market has opened up to battery
capacity called capacity market units (CMUs). Demand side
29
BEIS (2020) https://www.gov.uk/government/consultations/contracts-for-difference-cfd-proposed-amendments-to-the-scheme-2020
30
The Prime Minister Office (2020) https://www.gov.uk/government/news/new-plans-to-make-uk-world-leader-in-green-energy
31
BEIS (2020) https://beismedia.blog.gov.uk/2020/03/03/support-for-onshore-wind-to-drive-green-commitment/
32
BEIS (2019) https://www.gov.uk/government/collections/electricity-market-reform-capacity-market
33
National Grid (2020) https://www.emrdeliverybody.com/CM/Auction-Results-1.aspx carbontracker.org 29storage providers leading to increased awards, although still CCGTs on the other hand took over 40% of the total awarded
only accounting for a very low average share at less than 0.5% capacity share every year and OCGTs took around 2.5%.
in all auctions from 2015 (T-4 2019/20) to 2020 (T-1 2023/24).
6.3 Proposed CCGT gas units to be built in the UK
Unit name Parent Company Capacity Start Stranded LCOE LCOE Years of
(MW) year year* (Gas) (CEP) operation
before
stranding
Meaford Energy St Modwen Properties, 299 2021 2021 £60.87 £57.47 0
Centre CC** Glenfinnan Properties ($84.11) ($79.41)
Kemsley Paper Mill DS Smith PLC 68 2021 2021 £60.87 £57.47 0
power station K4
Wrexham Energy St Modwen Properties, 299 2021 2021 £60.87 £57.47 0
Centre Glenfinnan Properties
Keadby power station Scunthorpe, 840 2022 2022 £61.87 £54.87 0
2 Lincolnshire County ($85.48) ($75.82)
Belfast Harbour Estate Evermore Group, 480 2022 2022 £61.87 £54.87 0
power station CC Crescent Capital
Group LLC
King’s Lynn-B power Energetický a 850 2022 2022 £61.87 £54.87 0
station CC 1 průmyslový holding,
a.s.
Table continues overleaf
30 carbontracker.orgUnit name Parent Company Capacity Start Stranded LCOE LCOE Years of
(MW) year year* (Gas) (CEP) operation
before
stranding
King’s Lynn-B power Energetický a 850 2022 2022 £61.87 £54.87 0
station CC 2 průmyslový holding,
a.s.
Tees Combined-Cycle Sembcorp Industries 850 2022 2022 £61.87 £54.87 0
Power Plant CC 1 Ltd
Tees Combined-Cycle Sembcorp Industries 850 2022 2022 £61.87 £54.87 0
Power Plant CC 2 Ltd
Hillhouse Enterprise NPL Group 900 2022 2022 £61.87 £54.87 0
Zone Power Station
power station CC 1
Eggborough power Energetický a 730 2022 2022 £61.87 £54.87 0
station CC 1 průmyslový holding
(EPH)
Eggborough power Energetický a 730 2022 2022 £61.87 £54.87 0
station CC 2 průmyslový holding
(EPH)
Eggborough power Energetický a 730 2022 2022 £61.87 £54.87 0
station CC 3 průmyslový holding
(EPH)
Drax power station 5 Drax Group plc 1800 2023 2023 £62.70 £52.72 0
Repower ($86.63) ($72.85)
Table continues overleaf
carbontracker.org 31Unit name Parent Company Capacity Start Stranded LCOE LCOE Years of
(MW) year year* (Gas) (CEP) operation
before
stranding
Drax power station 6 Drax Group plc 1800 2023 2023 £62.70 £52.72 0
Repower
Ferrybridge power SSE Generation 1100 Unknown 2020 £61.87 £54.87 0
station D CC 1 Limited
Ferrybridge power SSE Generation 1100 Unknown 2020 £61.87 £54.87 0
station D CC 2 Limited
* Inflection point for clean energy portfolio (CEP) economics was already happening in 2020
**Meaford Energy Center was scheduled to come online in 2020; however, it is still not operational so we assume 2021 as start
date
32 carbontracker.org6.4 Proposed OCGT gas units to be built in the UK
Unit name Parent Company Capacity Start Stranded LCOE LCOE Years of
(MW) year year* (Gas) (CEP) operation
before
stranding
Hirwaun Power Station Drax Group plc 299 2020 2036 £96.33 £237.08 16
GT ($133.1) ($327.57)
Progress Power Station Kavala Consortium 299 2020 2036 £96.33 £237.08 16
GT
Abergelli power Drax Group plc 299 2022 2036 £98.33 £211.08 14
station GT ($135.86) ($291.65)
Millbrook Power Drax Power Ltd, 299 2022 2036 £98.33 £211.08 14
Station power station subsidiary of Drax
GT Group plc
Eggborough power Energetický a 299 2022 2036 £98.33 £211.08 14
station GT 9 průmyslový holding
(EPH)
VPI Immingham Vitol SA 299 2023 2036 £99.44 £199.85 13
power station B ($137.4) ($276.13)
West Burton power Electricite de France 299 2024 2036 £100.57 £189.33 12
station C ($138.96) ($261.66)
carbontracker.org 336.5 Average capacity factor of each hour of the day in each month
Average hourly capacity factor by month in 2019 (Onshore wind and Solar PV) compared to monthly capacity
factor of CCGTs
Solar PV Wind (onshore) CCGT
60%
50%
Capacity Factor (%)
40%
30%
20%
10%
0%
Hour in Each Month
Source: Carbon Tracker analysis on RenewableNinja data and ENTSO-E generation data
Solar energy complements onshore wind, because its capacity 16% over the full period of day and night (see above). During
factor peaks during the warmer months of April to September the darker first and fourth quarters, solar irradiance is weak,
when the capacity factor of wind generation is lowest. Mean pushing the solar PV capacity factor down to a daily average
hourly solar capacity factors are in a range of 20 to 50 percent of 6%.
between 9AM and 7PM during summer months, averaging
34 carbontracker.orgIt is worth noting that the generation profile of solar and wind is
based on the UK’s national average, and future planning would
benefit from more in-depth regional analyses to determine
installation locations that maximise the ability to fulfil peak
demands.
6.6 Key assumptions
Assumption Detail Source
Gas plant monthly We use historical dispatch data of similar plants in the proposed country from ENTSO-E (2019)
capacity factor ENTSO-E and calculate the average monthly CF.
Gas plant costs Capital cost is based on IEA WEO’s cost projection on a technology and country IEA (2015)
(Capex, FOM, VOM) level. The capital cost for OCGT is $467/kW, that for CCGT is $933/kW.
Department of
Fixed O&M assumptions depend on the technology: $10.52/kW for OCGT; Energy and Climate
$13.15/kW for CCGT; Costs are inflation adjusted. Change and Leigh
Fisher (2016)
Variable O&M assumptions depend on the technology: US$1.18/MWh for OCGT;
US$1.91/MWh for CCGT;
The values are obtained from the report by Department of Energy and Climate
Change and Leigh Fisher (2016)
Cost of renewables LCOE of solar PV, onshore wind and offshore wind is obtained from BNEF (2020). BNEF (2020)
(Solar PV, Onshore Costs are specific to the UK.
wind, Offshore wind)
Cost of battery CTI analysis based on Lazard’s Levelized Cost of Storage Analysis—Version 5.0 (2019). Lazard (2019)
storage (CapEx,
Storage operating expenses are dominated by the need to replace lost capacity
FOM, VOM)
that accumulates with each cycle. We assume 0.03% of battery capacity is lost each
time the battery is cycled.
Table continues overleaf
carbontracker.org 35You can also read
