The role of renewables in
meeting Net Zero 2050


The UK’s Net Zero system looks incredibly complex, with our energy being generated by: intermittent renewables contributing 58%, combined cycle gas turbine (CCGT) with carbon capture storage (CCS) at 22%, nuclear 11%, bioenergy with CCS 6%, and others 3%.

Intermittent renewables mean primarily offshore wind, and at 58%, it clearly has an important role to play, but we must be realistic about the challenges and cost to consumer.

Offshore wind is a success story in the UK, and government intervention in this market aided this success with massive support to initiate early projects. Without this, no offshore wind projects would have been built.

To meet 2050 targets, we need to deliver an unprecedented build rate of energy infrastructure – between 9 to 12GW built a year, every year, for the next 30 years. The UK currently has no CCS capacity, nor a hydrogen production industry. Without these, without major capital energy projects, and a coordinated approach, we will never reach 2050.

The increase in offshore wind generation required is seen as 30GW by 2030, and 75GW by 2050. Feasible? Yes, but understandably with its challenges. The industry enjoyed a rapid technology advancement, due to cross-sector skills from the oil and gas industry, but as turbines get bigger, infrastructure needs to be sturdier, and winds are stronger further out to sea.

Cost

Levelised Cost of Energy (LCOE) has fallen dramatically in recent years from £150/MWh to as low as £39.65/MWh in this year’s Contract for Difference (CfD) auction which awarded 5.5GW of offshore wind projects. The UK Government has also committed to two further CfD auctions in 2021 and 2023.

Whilst the fall in strike price for the latest wind farms demonstrates the positives of sustained Government support to an industry, individual LCOE values don’t tell the full story in terms of costs to consumers. First of all, the average cost of offshore wind needs to be viewed across the UK fleet, and our assessment suggests that when the last of the current contracted wind farms is commissioned, the average cost will be around £75/MWh. Whilst that will continue to drop as older wind farms are decommissioned and newer ones come online, deploying floating technology for projects in deeper waters will have an impact.

In addition, as the percentage of intermittent electricity generation (such as offshore wind) in the system increases, so do the costs associated with system integration to manage the variability of supply – up to an additional £20/MWh with the extent of renewables in the proposed Net Zero system. Whilst this additional cost is not seen at the point of generation, it will make its way to consumers bills in one form or another.

The UK accounts for 44% of Europe’s generating capacity, and while we’re recognised as a market influencer, big players in the offshore wind market are emerging (China, USA, Germany, Taiwan, Netherlands, and France). Global government support will continue to drive offshore wind as a reliable source of energy, but this growing international market may put pressure on supply chains, in turn limiting further cost reductions.

Technology

Net Zero assumes that the capacity factor for turbines in 2050 is 58%. The first UK windfarms are operating at a lifetime capacity of ~31% and the most recent windfarms are still only operating at a lifetime capacity factor of ~44%.

To reach this 58% capacity, we need to improve technology such as turbine size and technology reliability. Ten years ago, the idea of a 10MW turbine on a monopile substructure was unimaginable. This year the world’s largest turbine prototype of 12MW, GE’s Haliade-X, started its year-long testing phase, and is due to be installed on the UK’s Dogger Bank windfarm. Standing at 260m high from turbine base to blade tip, it will be almost as tall as the Eiffel Tower.

Bigger turbines bring new challenges, which are not limited to the height, but also the machinery required to carry them, and the vessels to carry, lift and install them out to sea. Larger turbines will test the supply chain and push the limits of engineering teams.

But it’s not just about larger turbines. We need to build in areas of high wind speeds, which means further out to sea, in deeper waters; therefore, we need to quickly adopt and harness floating technology.

The exact total gigawatts that can be extracted from UK waters is uncertain but ranges between 300-900GW are often discussed.

Europe’s first floating offshore windfarm was installed last month, and with the UK’s first one, Kincardine off the Scottish coastline yet to go online, we don’t fully know the costs of operating in deeper water in more exposed conditions, but as noted above, there will be a cost increase as this technology is initially developed and deployed.

From a technical feasibility perspective, the scenario of offshore wind meeting 2050 targets is considered relatively low risk with respect to turbines technology. However, there is moderate risk regarding the shift into deeper waters and the use of floating technology. Cost assumptions may be optimistic, and prices may rebound.