Renewables forecast to overtake fossil fuels in 2020

Renewables will overtake fossil fuels in 2020 to become the "dominant" source of power in Great Britain, EnAppsSys has predicted in a new report.

Fossil fuel output fell almost 7% to 131TWh

Fossil fuel output fell almost 7% to 131TWh

Based on current trends, the consultancy expects renewables to generate roughly 121TWh of electricity in the 2020 calendar year. By comparison, coal and gas plants are forecast to generate 106TWh in the same period.

The prediction comes after it was revealed in November that the installed capacity of renewables had already surpassed that of fossil fuels.

EnAppSys made the forecast in its latest annual energy market review. According to the report, renewables generated around 96TWh in 2018 – a more than 15% increase over the previous year. Meanwhile, fossil fuel output fell almost 7% to 131TWh.

Gas remained the largest single source of electricity, accounting for nearly 38% of generation during the year. Renewables accounted for more than 31%, nuclear for almost 20% and coal just 5%. Annual coal output has now fallen nearly 90% since 2012.

“Last year, levels of wind generation displaced conventional power stations and whilst this leaves room for baseload generation it does squeeze levels of output from other generators in the market,” said EnAppSys director Paul Verill.

“In the short term at least, wind will continue to be the primary source of renewable generation having produced a record high share of the renewables mix in 2018.

“New electrical transmissions infrastructure that came online in 2018 will increase further the contribution of renewable energy to the UK fuel mix but constraints still persist despite the investments.”

EnAppSys said the rise of renewables is forcing conventional generators to adapt to lower levels of activity and find ways of replacing the lost revenues – a situation that has been exacerbated by the recent suspension of the capacity market.

The firm said the halting of payments to generators, which are still required to meet their obligations, has added to the financial pressure they face. It warned that some may be forced to close if these payments are not resumed in 2019.

“Against this backdrop, the margins for thermal power generation fell to 2014 price levels as the impact of reduced demand, increased levels of wind generation and very competitive market dynamics placed downward pressure on profits,” Verill explained.

“This occurred despite overall market prices being 30% higher than in 2017, driven by higher gas prices and a recovery in the EU ETS carbon market.”

He continued: “This dynamic should settle down over time, but with rising competition in the market driven by the growth of renewables it will become necessary to reinstate the capacity mechanism payments or some other alternative to fill the gap created by the lost income.

“If this is not the case, it’s likely that plant closures will be necessary to remove oversupply from the system and this will lead to decreased security of supply.”

Last month the government announced its intention to resume collecting capacity payments from suppliers during the current standstill period to enable contract holders to receive deferred payments promptly if the scheme is reinstated.

Tom Grimwood

This article first appeared on edie's sister title, Utility Week



Tags

coal | fossil fuels | Infrastructure | nuclear | renewables

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Renewables


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