By Tom Glover, RWE UK Country Chair
RWE UK’s Country Chair, Tom Glover responds to the advice published by the National Energy System Operator on achieving clean power for Great Britain by 2030
In summary:
- We welcome the NESO report, and their consultation with industry throughout the process. With swift, bold, and sustained action from the Government, regulators, and investors, a secure, clean, and affordable power system by 2030 is achievable.
- We agree with NESO’s definition that a clean power system is one where demand is met by clean sources. However, we disagree that the definition should necessarily commit GB to be a net exporter. In considering NESO’s advice, the Government should carefully consider whether such a definition is economically efficient, and good value for consumers.
- We support the broad pathways, but would note that reaching even the lowest end of the range of deployment for offshore wind will be very challenging. The Government must urgently address and deliver adequate procurement in the next two auction rounds for offshore wind to have any chance of reaching the required levels of deployment by 2030. With two-thirds of new offshore wind projects in the pipeline failing to win a contract in the last auction, a significant step-change is required.
- NESO firmly conclude that unabated gas will continue to play a critical role for security of supply, filling shortfalls during periods of low renewables output. It is therefore important that the right signals are in place to facilitate the continued, safe operation of the gas fleet. We believe this can be achieved with a reform of the existing Capacity Market. We welcome the Government’s recent consultation on lowering the threshold for three-year capacity market agreements, to support the economic case for refurbishing existing ageing plants to improve their reliability, and to extend their operating life.
- The report rightly recognises the importance of policy certainty and visibility of the future market to bring forward investment. However, we disagree that locational pricing is the right approach, and believe it is unlikely to result in anything other than significant market disruption. The anticipated benefits of zonal pricing are significantly reduced when assessed against the latest grid network plans; and require only modest changes in the cost of capital for investment to be completely eroded. It is important that the Government carefully reviews the case for zonal pricing in light of this.