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Introduction

The UK electricity system emits around 12,000 tonnes of CO2 each hour, and must be radically redesigned for the country to meet ambitious national carbon targets. The power sector will be pivotal as the current strategy is to rapidly decarbonise electricity during the 2020’s, and then use it to provide an increasing share of heat and transport.

Achieving these aims will require rapid and substantial changes in the power sector but there are tentative signs that the electricity sector turned a corner in 2012 and the required reductions are beginning to materialise. There are several complementary forces at work, which have combined to give a 46% reduction in carbon emissions in the space of just three years:

Demand is steadily declining by 1–2% per year

Coal is being displaced by gas, imported electricity and renewables, so its share has fallen by three-quarters since 2012

The share of renewables is growing rapidly: wind, solar and biomass now provide one-fifth of demand

These changes are not as simple as the headline views may seem. For example, demand has been depressed in recent years due to a succession of mild winters, which cannot be expected to continue indefinitely. The share of coal and gas consumption is influenced by international events. 2012 saw a fall in gas usage as the Fukushima disaster increased Japan’s need to import gas, the Arab Spring reduced supplies from the Middle East and American coal provided a cheap alternative as shale gas forced down US power prices. Between 2010 and 2012 coal prices for British power stations were level whilst gas prices rose 50%.

Smoke and mirrors

Furthermore, the mechanism by which the carbon of imported electricity is accounted for has an impact. An increasing share of electricity is being imported through interconnectors from France and the Netherlands and this electricity is treated as zero carbon when calculating national emissions inventories.

This conveniently neglects the fact Britain now “exports” around 3% of its power sector emissions abroad. This accounting convention implies that importing all of Britain’s electricity is a valid route to decarbonisation, even though French and Dutch fossil power stations release CO2 to the same atmosphere as British ones.

System on a tightrope

If understanding the progress towards decarbonisation is complex, the knock-on impacts of it are almost completely concealed when viewed through annual statistics. The intermittency of renewables, structural changes to demand and capacity scarcity cause problems at the extremes, not at the centre, so these can only be understood with high resolution data on the power system.

System operation varies dramatically from hour to hour because of the just-in-time nature of electricity production. Supply and demand must be balanced in real-time with limited recourse to storage and demand-side management. With an increasing share of generation becoming inflexible, semi-controllable and unpredictable, the system must cope with a widening range of conditions that will push both the operational capabilities and the economic rationale of the market. Britain’s electricity system is approaching several critical tipping points:

Weather-dependent renewables supplying more than 50% of instantaneous demand Wholesale prices falling negative in both summer (due to solar) and winter (due to wind) Solar output forcing minimum net demand below the level of must- run output (nuclear and CHP).

These will no doubt test the capabilities of National Grid to control the system, and may necessitate new markets or services, and the deployment of greater interconnection and storage.

UK in radical change

The UK electricity system is in a radical period of change which has seen carbon emissions fall 46% in the space of three years. Since 2012, demand has fallen steadily and coal’s share of generation has plummeted, displaced by gas, imports, biomass, wind and solar.

Peak demand has not (yet) compromised system reliability, despite installed thermal capacity falling by 20 GW. However, minimum demand is instead rapidly becoming an issue as it approaches the point where intermittent renewables and inflexible nuclear collide. These changes stem from a confluence of many factors, some that can be steered by policy, some that are simply beyond our control. Demand for electricity is falling, partly due to the energy intensity of the economy (and in turn efficiency improvement), partly due to unseasonably warm weather (perhaps influenced by climate change).

Generation from coal peaked in 2012 as the carbon price collapsed and gas prices rose to double the level of coal per unit output. This global phenomenon was influenced both by tight gas supply in the wake of the Japanese earthquake and cheap coal exported from America that was displaced from their power stations by the shale gas revolution. By 2015, electricity generation from coal had fallen to its lowest absolute level since 1955 (when demand was much lower and before the first nuclear reactors were built), whilst the UK’s production of coal has receded back to pre-industrial levels.

The way forward

The introduction of the UK Carbon Price Floor and its rapid rise to triple the level of the EU Emissions Trading System has brought coal and gas prices in line with one another again, making fuel switching commercially viable. Coal and oil have also been pushed off the system directly by clean air legislation, with plants forced to retire because of the Large Combustion Plant Directive (LCPD) and the Industrial Emissions Directive (IED). They have also suffered indirectly as biomass, wind and solar deployment have been supported through Renewables Obligation Certificates and Contracts for Differences.

Many of these changes have been influenced by policies set at the European level: the 20-20-20 targets for renewable energy, the LCPD and IED, and the international emissions trading scheme. With the UK decision to leave Europe, it is unclear whether these policies will be retained in the long-term. Retracting any of them is likely to increase Britain’s carbon emissions; however, with the Carbon Price Floor Britain has shown the will to go further than European incentives to decarbonise, with impressive effect.