The latest Electricity Market Summary from analysts EnAppSys shows that the coal use in the UK has continued to plummet as use of renewables continues to grow.
The continued closure of coal fired power stations across the UK has led to a 70% fall in the use of coal to generate electricity between the first and second quarters of 2016.
The report said: “Coal’s quickening exit from the market led to solar generation overtaking levels of coal generation for the first time ever in May 2016 with coal generation producing 0.89TWh of electricity and solar producing 1.38TWh, a trend that we believe will continue unless the
carbon price floor is altered or removed.”
Coal has now, they say, gone from “being the frontrunner in the industry, with the majority stake of generation, to this quarter falling below levels of imports from other countries.”
Growth of renewable generation slowed slightly in the second quarter of 2016, partly due to “lower wind speeds and subsequently lower wind generation”. However, despite a 3% drop in renewable generation between Q1 and Q2 if 2016, the annual growth rate was still at 10%.
While wind power generation slowed, solar power increased quite dramatically over Q2, in the run up to summer.
Overall, “the [renewables] sector continues to grow,” the report goes on, “with a 174% increase in solar and a 46% increase in biomass generation against Q2 2015.
The sharp increase in solar power capacity from 2015 to 2016 is likely due to several companies rushing to acquire Renewable Obligation Certificates (ROCs) before the deadline earlier this year in March. The subsequent slowdown in Q2 reflects this and is expected to continue in months to come.
EnAppSys’ director Phil Hewitt said: “This quarter’s electricity generation picture provides a clear example of how energy policy decisions can affect the electricity supply market.
“The closure of the Renewable Obligation to small solar farms has seen a mass pre-deadline build out of solar generation and DECC’s negative view of coal, in combination of the capacity mechanism and carbon price floor measures, has seen coal generation opt out of the wholesale market much earlier than expected.”
The increase in biomass over the year, despite a 7% reduction over the quarter, is largely down to the conversion of several old coal plants into biomass plants, something that is “expected to continue in the coming years as Lynemouth [a major coal power station in Northumberland] is converted from coal to biomass-fired generation.”
EnAppSys said that with renewable capacity continuing to increase, at least on an annual basis, and so long as nuclear power capacity grows to a sufficient level, then the electricity supply for the UK should be able to cope with the drastic reduction in coal power, and with further reduction in fossil fuel use generally.
They said: “With planned expansions in renewables, storage, import capacity and nuclear, the era of large thermal generation seems to be coming to an end. If nuclear plants are able to maintain necessary base load generation, the combination of interconnectors bringing power from the continent, renewables and nascent battery storage and greater demand-side response, potentially leaves less space for large coal and gas plants within the market.”
However, Hewitt warned, there may be some changes to the trajectory of the UK energy market following the vote for Brexit.
He said: “Of course moving forward we also now have Brexit to contend with, raising uncertainties over the country’s future participation in the Internal Energy Market and further concerns over investor confidence in the energy sector.”
Concerns about the effect Brexit may have on the energy market and our climate change commitments were raised immediately following the announcement of the referendum results. However, Energy Secretary Amber Rudd, as well as various EU and UN representatives have assured that nothing has changed either in the nature of the targets or in the UK’s commitment to meeting them.
