Solar energy generation reached a Q1 record-high in Great Britain (GB) in 2019’s first quarter (Q1’19). Solar energy systems produced 2.7 terawatt-hours (TWh) of emissions-free electricity across the nation excluding Northern Ireland, 46 percent more than the corresponding period a year ago and 43 more than 2018’s fourth quarter (Q4’18). GB solar and renewable energy production has likely plateaued for the time being as government incentive programs for solar and onshore wind have been phased out, however, according to power market data and information services provider EnAppSys.

Wind power production hit a new record-high of 15.1 GW in GB during Q1’19 for a half-hour period, as well. All told, Q1’19 renewable energy production totaled 27.2 TWh—16.6 TWh from wind, 6.2 TWh from biomass, up 8 percent year-over-year (YOY), 1.8 TWh from hydro and the 2.7 TWh from solar. The latest market data reveal that Great Britain’s march towards a “decarbonized” energy future is advancing, EnAppSys says.

“Coal has effectively ceased to be a major fuel source in the market and now ranks below gas, nuclear, wind, imports and biomass as a fuel source of significance,” said EnAppSys director Paul Verrill.

The market continues to progress towards an increasingly green future and this evolution will be supported by news that National Grid is seeking to manage the system without any carbon emissions for a number of hours by 2025. Driving this progression is significant growth in levels of renewable generation which, on current trends, could overtake fossil fuels in the not-too-distant future.

Surging GB solar, wind and biomass power generation

Wind energy generation for Q1 in GB exceeded the 13.1 TWh of electricity produced by nuclear power plants. Fossil-fuel power generation accounted for 43 percent of total power generation and coal power plants produced 2.9 TWh of energy for the period. That’s down 37.2 percent from Q4’18 and 65 percent from Q1’18 , according to EnAppSys.

Total electricity demand in GB dropped 4 percent from 85.4 TWh in Q1’18. Percentage-wise across GB, natural gas-fired power plants produced 39.5 percent of electrical power through the first three months of 2019, renewables 33.4 percent, nuclear 16.0 percent and coal power plants 3.5 percent. Energy imports accounted for 7.6 percent.

Solar and renewable energy has been experiencing rapid growth in GB since 2010 when the government introduced a renewable obligation certificates (ROC) scheme. That was followed by the institution of a feed-in tariff (FiT) that boosted deployments significantly. Solar power capacity rose from essentially zero three to four years ago to around 13 GW today as a result, Verrill explained in an interview.

Above-normal levels of sunshine has helped fuel GB solar energy production to new heights. “The weather’s been glorious; we just had a week of summer weather,” Verrill commented. “I think this may have been the hottest Easter in the U.K. on record, so we’ve had more solar energy available.”

“Solar had a very good year last year, and a very good quarter in Q1. We all forecast there will be some ongoing degradation in productive capacity, but I’d say that GB solar power capacity will probably plateau at around 13 GW, with renewable growth in the future coming predominantly from offshore wind. U.K. peak load is around 50 GW with a low of about 22 GW,” Verrill said in an interview. “Combined, solar and wind power of 35 GW could match mean load. Technically, we could have 100 percent renewable energy.” However, that can’t happen at present due to grid constraints, issues revolving around frequency and voltage management, Verrill said.

Investment returns on non-subsidized projects are currently unattractive, but a quadrupling of carbon emissions permit prices in Europe in the past year combined with higher fuel prices drove an increase in energy prices and improved returns on solar and renewable electricity. In addition, the removal of import duties on Chinese solar panels and lower capital costs improved the economics for grid-scale solar and wind power projects in particular, Verrill pointed out.

A fundamental power market restructuring

The GB power market has been undergoing a fundamental restructuring as renewables penetration has been increasing. However, the cost to the government of paying for the incentives, shifting political currents and a steep drop in the costs of solar and onshore wind power, to the point where they’re now competitive with, if not cheaper than, fossil-fuel or nuclear power, led to the decision to phase out subsidies for all but offshore wind and novel renewable energy technologies, Verrill told Solar Magazine.

“A large increase in solar capacity was seen in the lead up to April 2017, when the old ROC scheme ended. Since this, the growth of installed capacity has slowed as incentives have reduced. Currently, capacity stands around 13GW, compared for example to approximately 22GW for wind—14 onshore, 8 offshore,” Verrill said. According to U.K. government statistics:

From Q1 2015 to Q1 2016 there was a 3.1 GW increase (7.9 to 11.0 GW)

from Q1 2016 to Q1 2017 a 1.3 GW increase (11.0 to 12.3 GW)

from Q1 2017 to Q1 2018 a 0.5 GW increase (12.3 to 12.8 GW)

to Q1 2019, assumed ~0.3 GW (12.8 to 13.1+ GW)

“The principle [of the subsidies] was to foster growth for low- or zero-carbon renewable energy systems that were uneconomic so as to bring costs down, and that’s been successful,” Verrill pointed out. Given that success, “the government has been effectively closing all the subsidy schemes. There are no subsidies open to solar projects now,” he said. Some GB solar project developers and supply chain partners went out of business as the phasing out of subsidies progressed, while others decided to shift their attention and resources to other, more attractive markets, such as Australia, Verrill added.

Searching for ways to make unsubsidized solar economic

When it comes to fostering growth of renewables, the U.K. government’s attention focuses on offshore wind, for which it’s conducting auctions for targeted amounts of capacity. Adding new nuclear power capacity is under consideration, as well, but is subject to greater debate, Verrill continued.

There are no subsidies for solar power project development anymore, but there aren’t any planning restrictions for unsubsidized solar power projects either, Verrill noted. That said, project developers need to identify ways of generating the revenues and profits that would make unsubsidized solar projects economic.

With internal rates of return (IRR) in the 2–4 percent, project margins are very tight across market segments. Solar power capacity growth in GB has been slowing down as a result, but it hasn’t come to a standstill, according to Verrill.

“The main thing driving growth is behind-the-meter solar, where suppliers contract directly with consumers. Solar projects that can sell electrical energy at around USD100–110 per MWh can be viable,” Verrill said. Large GB corporations, including oil and gas giants BP and Shell, are playing a growing role in the market for direct solar and renewable power purchase agreements , he pointed out.

Ongoing power market reform that opens up opportunities for project developers and utilities to monetize solar, wind, energy storage and demand-side resources management will be required. Solar power producers can now participate in the U.K. government’s capacity mechanism scheme, for instance. Regulators are consulting regarding “solar plus storage” to provide firm capacity but have yet to reach a conclusion, Verrill noted.

The GB power sector has been experiencing hints of the so-called “utility death spiral” that has emerged in other countries, or parts of countries, where renewable energy penetration is high or has been growing rapidly. However, the electricity delivered via direct solar or renewable power producer-to-consumer agreements avoids contributions to public infrastructure costs. GB regulators are seeking to increase system charges on renewable generation by moving elements of recovery more to fixed rather than variable charges on imports to consumers, Verrill explained.

Avoiding the utility death spiral

“If too many people go off-grid the infrastructure costs, the remaining utility grid customers bear of operating and maintaining the grid rise disproportionately,” Verrill elaborated. “It’s a bit of a loophole, and the government is looking to close that down,” he said. “It used to be that centralized power generators saw to supply and electricity only flowed one way. With all the wind and solar capacity that’s now embedded in the system, we now have a mixed, centralized and decentralized system.”

GB’s clean energy transformation is leading renewable energy providers and utilities to develop, acquire and deploy a range of new distributed energy products and services in front of and behind the meter. Having rolled out Europe’s first and largest virtual power plant (VPP) in Germany, Statkraft is assembling one in the U.K., and others in France and Turkey.

Statkraft’s virtual power plant in Germany aggregates and collectively manages some 1,300 wind farms, 100 solar power producers, 12 biomass power plants and eight hydropower plants. Collectively they generate more than 10,000 MW of electrical power, equivalent to that produced by 10 nuclear reactors.

“The virtual power plant connects these small power producers,” explains Andreas Bader, Vice President Sales & New Products. “This enables us to sell the renewable power and draw on the full flexibility of the renewable plants as if it were one large-scale reliable supplier. Moreover, the power producers do not have to sell the power themselves, with all the risks associated with fluctuations between supply and demand.”

Adding energy storage capacity to solar and wind power generators is one means project developers and utilities are evaluating and investing in to generate new revenue streams whilst at the same time addressing the issue of intermittent generation associated with solar and wind. “Co-located storage can help solar projects to access other revenue streams, for example, price arbitrage. It can also help to avoid grid curtailment,” according to the U.K.’s National Grid.

Rather than stopping generation when the network faces constraints or when the price is low, solar energy can be diverted to storage. It can then be discharged at a later point, when networks are not constrained or prices are higher.

Solar project developers and utilities are also considering promoting and fostering growth of community solar projects and programs. In addition, U.K. regulators and industry are considering moving towards real-time power market pricing and trading given the more volatile and intermittent nature of solar and wind power generation, Verrill added. Doing so poses technical and operational challenges and requires investments in real-time power market data and communications platforms and systems.

“Because renewables are heavily dependent on weather, you need to know what the weather is doing. As we all know from everyday life, the weather forecasts are often wrong,” Statkraft’s Bader explained. “Even five minutes before you sell the production from your wind park, you are not sure exactly how much you are going to produce…You need to forecast and sell your production as efficiently as possible. The short-term market is highly volatile.”

The opportunity to do their part in reducing greenhouse gas emissions and mitigating and adapting to climate change, while helping achieve E.U. and U.N. Paris Climate Agreement goals, also plays a role in decisions to invest in solar, wind or other renewable energy systems, whether it’s a family, community or a commercial enterprise, Verrill continued. “Corporations such as BP and Shell have carbon emissions permits, so they have an incentive to buy ‘green’ power even if it comes at a premium to the market price,” he said.

Decarbonizing heat and transportation

Decarbonization of the entire economy and society is the principle guiding and informing U.K. energy policy at this stage of its clean energy transition. Decarbonizing transportation and heat energy production and use is the biggest challenge in this regard, according to Verrill.

Fossil-fuel cars are being phased out by 2030 and there’s lots of discussion regarding ways to shift buildings and industrial processes from natural gas to electrical heating…We have lots and lots of gas and gas infrastructure. Everyone is connected to gas mains. Electrifying heating, coupled with energy storage and vehicle-to-grid (V2G) infrastructure, would increase demand for electricity and the use of renewables.

Looking ahead, the U.K. government is considering implementing a Smart Export Guaranteed (SEG) program to replace the now-defunct FiT for small-scale solar power producers. “Under the SEG, the government would legislate for electricity suppliers to remunerate small-scale, low-carbon generators for the electricity they export to the grid. Remuneration would be available to all the technologies eligible for the FiT scheme up to 5 MW in capacity.”

Green energy supplier Octopus Energy introduced fixed-rate solar tariffs for energy customers export to the grid. One tariff rate is fixed at 5.5 pence per kilowatt-hour (kWh), while a second is linked to government tariff scheme. EoN is offering to pay 5.24p/kWh, the same as that for the expired FiT scheme, to the first 500 customers that sign up for its Solar Reward Scheme.

Advancing towards 100 percent renewable energy

National Grid’s recently created Electricity System Operator (ESO), which manages Great Britain’s grid network, is preparing to operate the electricity grid based on National Grid’s recently created Electricity System Operator (ESO), which manages Great Britain’s grid network, is preparing to operate the electricity grid based on 100 per cent renewable energy by 2025. “Great Britain needs to decarbonize its energy system to help address the ever-increasing threat of climate change,” the utility said in a recently issued policy statement. “A key element of this is to move to lower, and even zero, carbon emissions for the electricity system. Over the past decade, the electricity system has been reducing its carbon intensity and GB has been leading the way among the major world economies in this regard.”

National Grid said it won’t be long before renewable energy will be able to meet all Great Britain’s electricity needs. “Zero carbon operation of the electricity system by 2025 means a fundamental change to how our system was designed to operate; integrating newer technologies right across the system—from large-scale off-shore wind to domestic scale solar panels—and increasing demand-side participation, using new smart digital systems to manage and control the system in real-time,” ESO Director Fintan Slye said.

“Operating a zero-carbon electricity system in 2025, whenever there is sufficient renewable generation, is a major stepping stone to full decarbonization of the entire electricity system; enabling new technologies and removing barriers to ever-increasing levels of renewables,” Slye continued. “The new products and services we will introduce will help reduce the overall cost of operating the system, driving down costs for consumers.”

* Cover photo: Wikimedia Commons