The UK will need to install 133GW of low-carbon power by 2050 if it is to hit legally-binding carbon targets set out in the Climate Change Act, according to Aurora Energy Research.
In a new report, ‘Delivering “net zero” – Will the wholesale market cease to function in a high renewables world?’, the Oxford consultancy found an 80% cut in carbon emissions would require an additional 93GW of capacity, up from 40GW now.
The report assumes power demand will grow by 65% to 530 terrawatt-hours by 2050 with all cars and 80% of residential heating electrified.
Aurora estimates the 133GW of 2050 clean power capacity would comprise 66GW of wind, 50GW of solar and 17GW of nuclear. Current wind capacity is pegged at 17GW with solar at 13GW and nuclear at 9GW.
The rise of renewables means wholesale markets are likely to follow a distinct seasonal pattern, it found, with low carbon generation fulfilling all of summer demand and gas generation operating for winter periods.
Summer prices will fall to £10 a megawatt-hour and winter prices will remain in line with today’s levels.
Power plant economics will therefore be focused on winter months, with wind farms making more than 90% of annual revenues in this period.
Bringing on new gas generation onto the power system would require significantly higher capacity payments, exceeding £40/kW.
“New assets will be increasingly reliant on capacity market payments for economic viability,” said Aurora lead GB power market export Weijie Mak.
“To integrate a large buildout of renewables at minimal cost, regulators should aim for a harmonised policy across all technologies.”