5. Decarbonising electricity supply

5.1. Setting the scene

  1. To enable the Net Zero transition, it is clear that the power generation sector must both increase in capacity and reduce in carbon intensity on a hitherto unprecedented scale. The 2020 UK Energy White Paper explains that in order to meet a possible doubling of electricity demand by 2050, the capacity of clean electricity generation would need to increase four-fold, and the decarbonisation of electricity will increasingly underpin the delivery of Scotland’s and the UK’s net zero target. However although measures have been put in place to support the development of specific projects and technologies, government is not targeting a particular generation mix for 2050, trusting instead that the electricity market should determine the best solutions for very low emissions and reliable supply, at a low cost to consumers [29].
  2. Equally, it is important to clarify that this report does not seek to justify or promote the exclusion of any generation technologies from the future GB generation mix, but makes the case that the Project is a low regrets opportunity which should be consented because of its capacity to play a major part in reducing carbon emissions from Scotland and the wider UK, commencing in the mid 2020s. The Project will also support the unlocking other low carbon pathways through the potential to provide energy to decarbonise home heat, transport and industrial demand as well as to power green hydrogen production facilities in Scotland and across the UK.
  3. The National Infrastructure Commission (NIC) concluded in their 2020 Opportunities for the power sector report [41] that new low carbon capacity is needed over the next decade, and that renewables can deliver.
  4. Moreover, the report states that due to current plant retirements, in the 2020s there will be a gap in electricity generating capacity which needs to be filled. Within the context of the need to achieve Net Zero, it must be that low carbon generation fills the gap both in Scotland and in the UK more widely. Given that lead times for renewable developments are generally shorter than low-carbon dispatchable power developments, renewables are ideally placed to fill this gap. With the exception of Hinkley Point C, nuclear power stations would likely only be able to deliver new capacity significantly into the 2030s. It therefore makes sense for government to take action to deploy renewables now.
  5. The electricity systems of Scotland, Wales and England are essentially one system. High voltage cables (the NETS) connect major power stations to consumers located across Great Britain. Regional distribution systems are in place to transmit power from the high voltage national system to local consumers. When power demand in Scotland outstrips local supply, power generated in England or Wales will instantaneously flow north to meet that demand. Conversely, when more power is produced in Scotland than is required locally, for example when the wind is strong, power will flow south to England and Wales and offset carbon intensive generation there.
  6. Although devolved administrations have set their own decarbonisation targets, the connectedness of the electricity systems across Great Britain means that decarbonisation of the electricity sector needs to be considered at the GB level, especially as the share of low carbon electricity supplied approaches 100%.

5.2. Low carbon generation delivery in the last decade

  1. Table 5‑1 shows elements of the government’s Low Carbon Transition Plan (LCTP), made in 2009, which were expected to make significant contributions to reducing the carbon intensity of electricity generation. A recent status on these initiatives is also included. While a number of the major initiatives detailed in the LCTP have not yet delivered, carbon emissions from the power generation sector are being reduced, both in Scotland and across the UK. This has provided a major contribution to the current performance of both Scotland and the UK versus their legal decarbonisation obligations, and has been delivered predominantly by the closure of the existing coal fleet as well as an increase in renewable generation capacity.
  2. Since 2019, each of NGESO’s FES publications has described three pathways involving radical change across many industry sectors, which will deliver the required reductions in carbon emissions across the UK to meet Net Zero, and one scenario which will fall short. The Net Zero commitment underpins the urgency for new low carbon generation infrastructure to be built and commissioned, both in Scotland and across the UK generally, and government support will be critical for these developments to progress to commissioning. The National Infrastructure Commission (NIC, established in 2015 to provide independent, impartial advice on the UK’s long-term infrastructure needs) stated in their first National Infrastructure Assessment report [66] that new nuclear power plants and carbon capture and storage infrastructure will not be built by the private sector without some form of government support.

5.3. Low carbon generation technology assessments

5.3.1.    Carbon Capture Usage and Storage

  1. FES 2012 [69] included a forecast of between 5GW and 14GW of CCUS being operational (across coal, gas and biomass plant) by 2030. One of the biggest challenges with CCUS at the time of writing the LCTP, was that while each stage – capture, storage and transport – had already been shown to work, it had never been tried at a commercial scale on a power station and never the complete process from start to finish. As of today, Grid-scale CCUS from power generation has not yet been proven in Europe. CCUS technology has not yet progressed to industrial scale, and no new large-scale carbon generating power stations with CCUS capability have yet been constructed in GB. Government do not foresee that CCUS will make any significant contributions to carbon reductions in GB until the 2030s [43, 70] although CCUS remains a key technology in support of climate change and government is developing detailed strategy and support for developing the technology in readiness for the 2030s.
  2. The UK chose to largely decarbonise its power sector by adopting low carbon sources quickly. However, being cognisant of the advantages to the UK of maintaining a diverse range of energy sources, and so avoid dependency on a particular fuel or technology type, support for CCUS continued through the 2010s. The NIC concluded in their 2018 assessment of national infrastructure [66], that CCUS would only become useful for decarbonisation of the electricity generation sector in the 2040s and beyond, by which time the decarbonisation and adequacy of electricity generation must already have been largely achieved in order to support decarbonisation in other sectors. Until as recently as 2019, government did not foresee that CCUS would make any significant contributions to carbon reductions in the UK until the 2030s [70, 41] but government is currently working with industry to bring forwards the deployment of CCUS into the 2020s. A 2020 update to NIC’s analysis [41] proposes that CCUS should be utilised with bioenergy to generate power at negative emissions, or to produce hydrogen. Crucially the NIC present CCUS as being deployed alongside significant growth in the capacity of Renewable Energy Sources (RES), rather than as a substitute.

Table 5‑1: Projections from 2009 for a low carbon power sector and a 2022 status

[64, 3, 65, 1, 66, 67, 29, 68]


  1. The Prime Minister's Ten Point Plan [45] included an ambition to develop “world-leading technology to capture and store harmful emissions away from the atmosphere, with a target to remove 10 million tonnes of carbon dioxide by 2030” and subsequent development has seen that ambition extend.
  2. CCUS is prominent in the 2020 National Infrastructure Strategy and Energy White Paper. CCUS is regarded as essential to achieve Net Zero, because of its potential to decarbonise gas fired and biomass power plants, decarbonise industry, produce low-emissions hydrogen and deliver greenhouse gas removal technologies. However such benefits will materialise if and only if projects become operational in time.
  3. A commitment to deploy CCUS in a minimum of 2 clusters by the mid-2020s, and 4 by 2030 at the latest, has now been established. Two clusters have been selected: HyNet in the North West of England, and East Coast in the North East. The clusters include the ability to capture and store CO2 from industrial sites and from power generation, produce both green and blue hydrogen (see Section 4.7), and enable the use of hydrogen as a substitute for fossil fuels in industrial applications and public transport. These clusters aim to capture and store 20 - 30 MtCO2 per year by 2030 [71] or approximately 5% of UK emissions. A significant pipeline of projects, commissioning in incredibly quick order, will be needed in order for CCUS to become a significant support to decarbonisation efforts in the UK before the mid-2030s, and a Scottish Cluster has been selected as a UK reserve cluster, if a back-up is needed [71].  Two Power CCUS projects, both part of the East Coast Cluster are, as at October 2022, progressing through their Development Consent Order (DCO) planning process.  However both the UK and Scottish governments recognise that the technology has not been delivered at scale and significant risks remain.
  4. Although further clusters are expected to follow the Track-1 clusters, the Scottish Cluster status as a reserve cluster only in Track 1 means that currently it is unlikely to be delivered alongside HyNet and East Coast by the mid-2020s. The role of CCUS and Greenhouse Gas Removal (GGR) technologies in Scotland's low carbon energy mix before 2030 may therefore be lower than current policy ambitions would deliver. The CCC recommend that “Clear contingency plans will have to be developed for meeting the 2030 target if it should turn out that GGR cannot be delivered at scale on the necessary timetable ... if developments on CCS do not provide confidence that they can deliver by 2030” [15].

5.3.2.    Nuclear Power

  1. Scotland currently opposes the build of new nuclear stations using current technologies because of the poor value for consumers that the Scottish government believes they provide. However the Scottish government recognises an increasing research and industry interest in the development of new nuclear technologies such as SMRs (Small Modular Reactors) which provide promising but as yet unproven opportunity. Scotland's policy position is therefore that it has a duty to assess all other new nuclear technologies based on their safety, value for consumers, and contribution to Scotland’s low carbon economy and energy future.
  2. Nuclear power has attracted significant government attention over the last decade, including plans for 16GW of new build capacity by 2030, described in the 2013 Nuclear Industrial Strategy [72]. One new nuclear project (Hinkley Point C) is under construction and government has committed to conclude on a support package for one more large-scale nuclear power plant in the UK. Others either remain in their development phases,or have been abandoned.
  3. Nuclear currently provides the largest capacity of dispatchable (i.e .non-renewable) low carbon power generation and therefore is an incredibly important operational generation technology in the context of decarbonisation. Nuclear has historically met approximately 20% of GB demand and because the existing nuclear fleet has been able to continue operating beyond its original closure dates, nuclear has until recently continued to generate approximately a one-fifth share of demand.
  4. Existing nuclear is close to the end of its life. At the date of writing this report, Hunterston B (1GW, Scotland), Dungeness B (1GW) and Hinkley Point B (1GW) have closed and firm closure dates have been set for a further 2.4GW of nuclear capacity in 2024 (Heysham 1 and Hartlepool) although operators EDF are currently investigating possible further life extensions. The final two Advanced Gas-Cooled Reactors (AGR, one of which, Torness, is in Scotland) will close in 2028. This information is illustrated in Figure 5‑1. Of the currently existing UK nuclear fleet, only Sizewell B (1.2GW) will operate beyond 2030.

Figure 5-1:
Generating capacities and announced closure dates for each AGR station

Figure 5‑1: Generating capacities and announced closure dates for each AGR station

[Author analysis of data sourced from www.edfenergy.com]

 

  1. Nuclear power has attracted significant government attention over the last decade, including plans for 16GW of new build capacity by 2030, described in the 2013 Nuclear Industrial Strategy [72] and more recently ambition in the BESS for 24GW by 2050 [108]. New nuclear projects are ongoing. Hinkley Point C is currently under construction and other projects are at various stages of development. But it is clear that new nuclear will not be built out at the appropriate rate and scale so to allow it to continue to contribute a one-fifth share of GB demand through the 2020s and into the 2030s. The scale of nuclear’s contribution to decarbonisation beyond the 2030s is also currently uncertain, because currently only Hinkley Point C is a confirmed and funded development. Figure 5‑2 charts projections of nuclear capacity out to 2050 based on current end of life dates for the existing fleet as well as scenarios of new nuclear build.
  2. Government have removed many barriers to nuclear development over the last 10 years. This includes: site selection (the National Policy Statement for Nuclear Power Generation); regulatory approval of reactor designs (the Generic Design Assessment (GDA) process); and revenue and back-end cost certainty (the Contract for Difference (CfD), a key element of the 2013 Electricity Market Reform, and the Funded Decommissioning and Waste Management Plan). The Energy Act 2013 also created a body corporate, the Office for Nuclear Regulation (ONR) to regulate, in Great Britain, all nuclear licensed sites.
  3. These policy instruments clearly signalled that the UK was open to nuclear business and that it was now for commercial entities to bring new nuclear to market. The process which needs to be followed to bring new nuclear to commissioning is neither easy, nor short. Nuclear projects have long development and construction lead times, as illustrated in the development timeline for the Hinkley Point C project (currently under construction and currently forecast by its developer, a joint venture between EDF Energy and China General Nuclear (CGN) to have a commissioning window of June 2027 to September 2028 [110]) shown in Figure 5‑3.


Figure 5-2:
Projections of current nuclear capacity as existing stations close

Figure 5‑2: Projections of current nuclear capacity as existing stations close

Adapted from [107, 73, 37, 74]

 

  1. Government’s Energy White Paper, published in December 2020, sets the scene for further nuclear development in GB and confirms the identification of a “Regulated Asset Base model [which] remains credible for funding large-scale nuclear projects” [29]. The Nuclear Energy (Financing) Act was enacted in 2022, formalising the Regulated Asset Base framework for energy infrastructure in UK legislation.
  2. Sizewell C (SZC), also EDF/CGN, is currently progressing through development. In December 2020 government confirmed that it is to enter negotiations with EDF in relation to the Sizewell C project as it considers options to enable investment in at least one nuclear power station by the end of the current Parliament (no later than May 2024). A project aiming to build the third and fourth UK EPR, SZC received its DCO in July 2022 and may proceed through construction more rapidly than HPC, once funding mechanisms have been agreed. EDF have not formally committed to a timeframe for Sizewell C but construction work may last for a decade.
  3. CGN have taken the lead on the Bradwell B project. GDA on their reactor design started in 2017, and concluded in February 2022. No indications of intended project timelines have been published by the developer, however an assessment of the potential earliest commercial operation date for this reactor, based on development durations of other projects, may be in the mid/late 2030s.
  4. Two other large-scale new nuclear projects have folded without securing agreement to proceed. The first to be abandoned was Moorside, Cumbria. Toshiba planned to develop three Westinghouse AP1000 reactors, commissioning from 2026 onwards. In March 2017, the failure in the US of two AP1000 developments which were unable to keep pace with time and cost schedules, came to a head. This directly resulted in Westinghouse (a Toshiba-owned subsidiary) filing for Ch. 11 bankruptcy in 2017.

 

Figure 5-3:
HPC Timeline


Figure 5‑3: HPC Timeline

[Author Analysis]

 

  1. The second abandonment was Wylfa Newydd, Anglesey, Wales. Hitachi, the parent owners of Horizon Nuclear Power, were developing a project to construct and operate two Advanced Boiling Water Reactors (ABWRs). The ABWR is not a new reactor design: four Japanese plants have already commenced operation, and more are under construction internationally. Critically, each of the completed reactors were built in less than 5 years. The ABWR received its GDA in late 2017; secured many of the necessary Environment Agency (EA) permits through 2018; and commercial discussions started with Government on funding arrangements in June 2018.
  2. Horizon’s forecast commissioning date for Wylfa remained at or around 2026 throughout the project development process, however commercial conversations with Government concluded without agreement in January 2019, prompting Hitachi to announce a suspension of the project under grounds of “economic rationality as a private enterprise.” [76]. Horizon withdrew its application for Development Consent Order on 16th January 2021, effectively closing the current chapter of potential nuclear development at Wylfa, citing a lack of “any definitive proposal” to transfer Wylfa to an alternative developer.
  3. At the time of writing this report, government has been reported as discussing with developers the very early stages of new plans to build nuclear at Wylfa, however, the earliest possible commission date for new nuclear at Wylfa would now be highly unlikely before the mid/late 2030s as any new proposals will effectively be starting afresh.
  4. Government remains committed to ensuring all technologies have a part to play in the future energy mix, providing that they offer value for money for consumers. Nuclear power could achieve this through either the delivery of larger projects or Small Modular Reactors (SMRs). SMRs aim for cost improvements through the production of multiples of units rather than an increase in scale.
  5. Government’s Industrial Decarbonisation Strategy aspires to have the first SMRs commercially deployed in the UK in the early 2030s, with an operational Advanced Modular Reactor demonstrator deployed at the same time [19]. The roll out of subsequent Next of a Kind schemes would be highly contingent on a large number of technical, commercial and environmental factors. American company NuScale is at the front of the global race to develop and deploy SMR technology and Rolls Royce is developing plans with the UK as its manufacturing base. NuScale plans its first US SMR installation by 2030 [77], three years later than previously planned. At the time of writing this report the GDA process has been readied for the assessment of SMR designs and opened for application in 2021 [29]. Rolls Royce’s 470MW Small Modular Reactor design entered GDA on 1st April 2022.
  6. The 2020 National Infrastructure Strategy [64] confirms government’s continued support for the development of nuclear technologies through the provision of funding to bring forward large scale and small modular reactors, but the strategy does not go as far as to indicate a target capacity for future nuclear technology, stating only that “government is pursuing large-scale nuclear projects, subject to clear value for money for both consumers and taxpayers and all relevant approvals”.
  7. The Energy White Paper sets out government’s commitment to aim “To bring at least one large scale nuclear project to the point of FID by the end of this Parliament, subject to clear value for money and all relevant approvals.” And the BESS [108] sets out Government’s ambition to increase plans for deployment of civil nuclear to up to 24GW by 2050.
  8. Figure 5‑2 shows that capacity from current and committed new nuclear projects (at the time of writing: only Hinkley Point C) will reduce from now until 2030. Without a significant and immediate drive from government to commit to further nuclear projects, nuclear capacity will most likely remain lower than current levels until at least 2035. Therefore, although nuclear will play an important role in the generation of low carbon electricity through to the late 2020s, the contribution it will make to achieving Net Zero will be lower in each year from 2023 until at least the mid 2030s, than is currently the case.
  9. The gap in low carbon power generation created by the closure of the existing AGR fleet in Scotland and the UK must be closed. The Project is part of the solution to closing that gap.

5.3.3.    Wave / Tidal Power

  1. Wave / Tidal power has been proposed at a number of locations in the UK, although wave technology development has experienced both cost and operational challenges [78]. Early predictions on future rollout of wave / tidal power were large but varied, ranging from 0.5GW to 4.5GW by 2030 [69]. Tidal power remains complicated to consent, and expensive to deliver, a position made clear by governments’ rejection of public funding for the Swansea Bay Tidal Lagoon in June 2018 [79].

5.3.4.    Demand response

  1. Energy demand management, which is also called Demand Side Response (DSR) could also play an important role in the future of the energy balance of the UK. DSR is valuable insofar as it is compatible with end-use generation technologies and system-wide commercial drivers. However DSR can neither increase the total amount of electricity generated in the UK, nor reduce the total amount of electricity consumed.
  2. Currently industrial DSR capacity is estimated at 6.5GW nationally [107]. FES scenarios forecast 13 – 24GW may be operational by 2030, rising to 16 – 27GW by 2050. Growth in DSR is a reflection on the scale and urgency of decarbonisation actions between now and 2030. DSR must grow alongside the development of solar and other renewable generation assets of all scales in order to stay on a path to achieve Net-Zero. Therefore although DSR may deliver a significant contribution to the delivery of UK decarbonisation before 2030, DSR cannot fully replace the need for new generating capacity to deliver GB’s energy objectives, further underpinning the need for low carbon generation to come to market within this timeframe.

5.4. Future low carbon electricity supply

  1. Each FES scenario developed by NGESO describes a possible way that the energy system may develop, based on a forecast of demand and government policy. The scenarios do not indicate forecasts of confirmed and consented generation capacities, nor do they seek to imply or impose restrictions on the capacities of generation of particular technologies which may be required, or may be delivered. The FES scenarios therefore do not imply a requirement for particular generation technologies, and nor can their datasets sensibly be disaggregated to indicate need for a single generation technology within a future system scenario.
  2. Further, the inclusion of future projects within the planning system does not also indicate a commitment by or obligation on the Applicant actually to deliver that project at all, or if it does, at a particular generation capacity.
  3. In the context of Net Zero, the FES are a useful suite of documents to understand whether particular future pathways for electricity generation will be successful from a national policy perspective. The need for more generation capacity to be built has been a consistent theme since the first FES was published in 2012.
  4. Each year the FES scenarios have described consistently high capacities of offshore wind generation connecting to the national transmission system, on the basis of objective economic assessment of current and future costs and/or market drivers. The FES scenarios can therefore be regarded as an important point of view, which contributes to an objective assessment of the need for, and scale of, low carbon offshore wind electricity generation developments under different future scenarios of demand and government policy, particularly within the context of Net Zero.
  5. In 2022, NGESO published the third edition of the FES since GB adopted Net Zero legal commitments. FES 2022 analyses three scenarios under which Net Zero emissions can be achieved by 2050.
  6. Only one of FES 2022 scenario (being a scenario of steady progression rather than rapid low carbon generation deployment) misses the legally binding national decarbonisation targets in 2050. This scenario sees the slowest growth in renewable electricity generation capacities.
  7. From their analysis, NGESO conclude that UK installed electrical generation capacity (including storage and interconnectors) needs to increase from 2020’s 107GW to 156 – 209GW to meet anticipated demand in 2030, this being an increase of 55 – 109GW on existing generation capacity following the decommissioning of all but 1GW of existing nuclear generation and the closure of all remaining coal generation (5GW) before that date.
  8. The most striking insight from the 2022 FES is that by 2030, over 70% of installed generation capacity must be low carbon generation in order to meet Net Zero targets, pointing to a significant growth in low carbon generation in the coming decade. Interconnectors are expected to contribute 7 – 9% of capacity and these will rely on our national neighbours to follow similar decarbonisation plans to the UK for their supply to be low carbon. Only 9 – 17% of GB operational capacity in 2030 will be carbon-intensive generation, down from 38% in 2022.
  9. Further, NGESO forecasts that between 310 and 365GW of generation capacity will be required to meet demand by 2050 (continuing the increasing trend from previous forecasts), with no remaining GB operational carbon-intensive generation [107], [13], [39] and [54].
  10. The FES scenarios which achieve Net Zero include offshore wind capacities of 40 – 51GW in 2030, 84 – 91GW in 2040, and 89 – 110GW by 2050. In every scenario, a pathway to Net Zero includes a significant increase of offshore wind capacity beyond that predicated in the Sector Deal, and an increase relative to NGESO’s forecasts from 2021 [107], [13].
  11. Six important predictions from NGESO’s most recent analysis [107] are that, by 2030:
  • While in all scenarios, GB energy demand is expected to be lower in 2050 than 2021 (by 40 – 56%), GB electricity demand is expected to increase in all scenarios as a result of electrification of transport & home heating, and replacement of fossil fuels with blended, gas, hydrogen or electricity. By 2050, electricity demand is forecast to increase by 62 – 100% versus 2021;
  • Storage and interconnection (flexibility) capacity will need to increase (from 10GW in 2021) to 19 – 33GW in 2030 and 48 – 79GW by 2050 to balance supply and demand both within the GB system and across borders;
  • Due to the electrification of other sectors, peak demand (FES uses the Average Cold Spell definition which is consistent with the treatment of demand in the electricity Capacity Mechanism) is expected to rise (from 2020’s level of ~58.8GW) by 66 – 92% by 2050, even with the storage and interconnection capacities anticipated above to support "peak shaving”;
  • Therefore GB installed generation capacity will need to increase (from 107GW in 2021) to 171 – 209GW by 2030 to meet demand and remain on track to meet Net-Zero, with 70 – 80% of that capacity being low carbon in 2030 (vs. 56% today), and 100% low carbon by 2050;
  • Installed generation capacity will need to grow even further (to 310 – 365GW) by 2050 to meet demand, and must be 100% low carbon to meet Net Zero legal requirements;
  • To meet the ‘Net Zero’ target, a radical transformation to our national energy ecosystem is required, meaning even more low carbon, wind and solar generation capacity than even the most ambitious scenarios currently envisage, will be required to meet the UK’s legally binding targets.
  1. NGESO are not alone in anticipating the capacity of low carbon generation required to meet Net Zero. The CCC suggest that in order to meet a doubling of electricity demand from 100% low carbon sources, by 2030 up to 60TWh of low carbon generation (equivalent to approximately 15GW offshore wind capacity) will be required, on top of the offshore wind sector deal commitments [43], and up to 75GW of offshore wind could be required by 2050 [5].
  2. The NIC scenarios anticipate that 129 – 237GW of renewable capacity must be in operation by 2050, including 56 – 121GW of solar, 18 – 27GW of onshore wind, and 54 – 86GW of offshore wind [41].
  3. All three of NGESO’s 2050-compliant scenarios include the commissioning of large capacities of low carbon offshore wind among other initiatives to facilitate emissions reduction in other industrial sectors. Research by the ESC corroborates this view, and anticipates broadly similar generation capacities as those proposed by the NIC. The ESC forecast that 165 – 285GW of capacity will be required in 2050, including 33 – 66GW of offshore wind. The ESC is more bullish on future nuclear capacity than other analyses, anticipating 20 – 38GW of nuclear versus 5 – 16GW (NGESO) and just 5GW (NIC) [37]. NGESO align with the ESC on the view that the 80% decarbonisation target could have been reached through multiple technology pathways, but that achieving Net Zero requires greater action across all solutions, including broader system-wide thinking. FES 2019, which was published just weeks after the Net Zero commitment was made, considered that in order to push to 100% decarbonisation, electrification, energy efficiency and carbon capture would all be needed at a significantly greater scale than assumed in any 80% decarbonisation scenarios [54]. Subsequent FES scenarios have progressively borne out that conclusion.
  4. Ofgem state that: “The UK has made great progress in developing offshore wind, but capacity will have to increase enormously to achieve net zero” [51], describing in the same document, their plans to “Explore regulatory options to support development of an offshore grid to enable a four-fold increase in offshore wind generation by 2030” – i.e. consistent with current government policy as confirmed in the 2020 Energy White Paper [29].
  5. Many forms of low carbon generation will be required to meet the UK Climate objectives. A diverse mix of generation is required to minimise integration costs for those times when variable technologies are not generating electricity, but this does not mean that particular low carbon generation developments should be curtailed to promote diversity. In 2021, GB sourced 42% of its electricity from renewables, and approximately 33% from wind alone [107]. In both 2019 and 2020, Denmark sourced 50% of its electricity needs from renewable generation (wind being the majority contributor) [80, 81], demonstrating that high proportions of renewable generation can be accommodated within national electricity systems. The UK can learn, and is learning, how to do this from other nations which are further ahead in this regard.
  6. In summary, experts have concluded, and government has agreed, that decarbonisation in the UK needs to be significantly deeper, broader and more urgent than it has previously been considered, this is evident through FES 2021 by an increase versus previous FES editions of all low carbon generation indicators, and in published analyses by other market experts.
  7. A massive move to electrification will be required fundamentally to underpin broad and deep national decarbonisation, and Net Zero requires a "system view” to be taken. This means recognising the importance of whole-system thinking in relation to the decarbonisation of non-energy sectors.

 

5.5. Offshore wind is critical to achieve deep decarbonisation

  1. Because electricity can be generated from low carbon technologies, the demand for electricity in GB will grow as electricity enables the decarbonisation of other sectors. The need for significant growth in new generation assets is therefore clear, not only to meet this additional demand, but also to offset the closures of many existing generation assets, either because of environmental regulation or technological lifetime limits.
  2. Historically generation assets in GB have been called ‘conventional’: predominantly coal, oil, gas, nuclear or hydro-powered. They have been dispatchable assets, meaning that their output and operational schedules are controllable: electricity on demand. Capacity factor is a measure of total actual generation per year as a proportion of total potential output in the year (plant capacity multiplied by 8,760 hours). Generally capacity factors have been high (>80%).
  3. Figure 5‑4 shows NGESO’s analysis of how generation capacity may evolve between 2030 and 2050 to meet a growing electricity demand, and a decreasing carbon budget. As GB makes progress towards its legal decarbonisation targets through the installation of more renewable generation capacity, total installed capacity rises in proportion. This is firstly because electricity demand is increasing, and secondly because the capacity factor at renewable assets is lower than the capacity factor at conventional assets, therefore relatively more generation capacity is required to meet the same level of demand with the same level of reliability.

Figure 5-4:
Generation capacity by technology type and amount of renewable capacity for 2030 and 2050

Figure 5‑4: Generation capacity by technology type and amount of renewable capacity for 2030 and 2050

Adapted from [107]

 

  1. One of the critical characteristics of the FES scenarios which meet Net Zero, is that the ratio of renewable generation capacity to annual average and peak demand increases from a current level of ~1:1, to ~2:1 and ~3:1 respectively through to 2050. Ratios implied in different FES scenarios are illustrated in Figure 5‑5. Critically, the Falling Short scenario, in which installed renewable capacity does not rise above the level of peak demand, or as a ratio of average demand, as high as the other (Net Zero compatible) scenarios.  Falling Short is not compatible with achieving Net Zero.
  2. It is important to appreciate that of the very many possible future scenarios for future electricity demand and supply, only some will achieve Net Zero. Some scenarios may cause cost-to-consumers to increase, while others may provide efficient and effective solutions. Both the UK and Scottish governments agree that increasing the amount of energy from renewable and low carbon technologies will help to secure energy supplies, reduce greenhouse gas emissions and stimulate investment in new jobs and businesses.

  3. In order to meet the anticipated increase in electricity demand, NGESO conclude that the capacity of installed and operational low carbon generation must increase massively from the level which is currently operational. Energy efficiency and electricity storage will also have their roles to play, but societal decarbonisation will occur largely through the production of energy through renewable electricity generation, which will then be stored and/or transmitted to displace the consumption of carbon intensive energy. Alternative energy vectors, for example hydrogen, will be of fundamental importance in the displacement of fossil fuels from industry, transport and homes. Electricity generated from low carbon sources will be an important means of producing hydrogen.
Figure 5-5:
Ratio of Installed Renewable Capacity to Average (solid) and Peak (dotted) demand in 2020, 2030 and 2050 (by FES Scenario)

Figure 5‑5: Ratio of Installed Renewable Capacity to Average (solid) and Peak (dotted) demand in 2020, 2030 and 2050 (by FES Scenario)

Adapted from [107]

  1. NGESO data shows that offshore wind generated 53TWh of electricity during 2021 from 13.1GW of built capacity [107]. This makes offshore wind the largest power generation technology (by output) in GB during 2021. Critically, with 40% of Europe’s wind in GB waters, offshore wind is a technology with future potential to meet the need for further growth. The second largest power generation technology, Combined Cycle Gas Turbine (CCGT), is not low carbon, so continued unabated gas generation is not currently consistent with Net Zero requirements. Either the source fuel must be decarbonised (e.g. a move from natural gas to hydrogen) or the power stations must be integrated with a CCUS network in order to remove net carbon emissions. The changing contribution of the third largest technology (nuclear) to low carbon generation in the coming decade, is discussed in Section 5.2.
  2. Section 5.3.1 describes why it is not likely that CCUS (the process to decarbonise carbon-intensive electricity generation) will play a significant role in reducing UK carbon emissions in the decade ahead, and Section 5.3.2 describes why nuclear generation will also not make a net positive contribution to carbon reduction over the same period. Yet Section 3.3 describes the urgent need for further progress to be made in decarbonisation. The UK must therefore continue to plan to decarbonise on a conservative basis to ensure sufficient supply is built out to meet demand across a wide range of future scenarios. Taking forwards no regrets, or low regrets projects, as described in the Scottish Energy Strategy and the UK Net Zero Strategy, is a key step in that conservative approach.


Figure 5-6:
The effect on carbon intensity, of removing additional offshore wind generation from the future GB generation mix

Figure 5‑6: The effect on carbon intensity, of removing additional offshore wind generation from the future GB generation mix

Adapted from [107]

  1. Hitherto unimagined capacities of renewable generation are therefore required to achieve total decarbonisation, not only as further development in dispatchable low carbon technology continues to bring the technology to operational scale, but also on an enduring basis, to meet foreseen electricity demand growth into and beyond the middle of this century.
  2. Error! Reference source not found. shows the evolution of carbon intensity of electricity generation under two scenarios. The green line shows forecast average GB electricity generation carbon intensity under the NGESO FES 2022 scenarios which the meet Net Zero target. Critically, the power sector reaches net negative emissions in the early 2030s. The yellow line illustrates the importance of offshore wind to the GB generation mix. By replacing future additional offshore wind generation with CCGT generation (at 394 gCO2/kWh) [114] the critical importance of additional offshore wind development to the decarbonisation of the GB electricity system becomes very clear. Without the development of additional offshore wind projects, the gap between the two carbon intensity trajectories widens through until the mid-2030s and does not close again, effectively putting a halt to further reductions in the UK’s carbon emissions.
  3. Scotland's emissions from the power sector are already very low; Scotland has only one large-scale carbon intensive power station still in operation and approximately 75% of the total fall in emissions in Scotland since 2009 have come from the power sector. So although the CCC state that “Emissions savings from the power sector have largely run out” [15] it is for Scotland to continue to consent and support the development of new low carbon generation assets to ensure that demand can be met and carbon intensity can stay low as electrification expands in the coming decades.
  4. Therefore the bringing forwards of offshore wind development projects should be prioritised and progressed with determined rigour and urgency, both for Scotland and for the UK, to enable their timely delivery and to ensure the carbon intensity trajectory illustrated can be achieved or bettered.
  5. Both Scotland and the UK require swift and continued deep decarbonisation actions to meet their Net Zero climate commitments. As the leading low carbon generation technology in both Scotland and in the UK, it is critical that offshore wind generation capacities continue to grow.

5.6. Floating Offshore Wind

  1. Floating Offshore Wind (FOW) is a natural evolution to existing, ground-mounted technology. The market is driven by the prospect of accessing a much larger ocean area with high-quality wind resources, but in water depths that are too deep for conventional fixed-bottom technologies. In Europe, approximately 80% of the total technical offshore wind resource is estimated to be located in water depths which are likely to require FOW technology.
  2. FOW may become a critical element of the global generation mix in order to deliver climate change mitigations. However the technology is currently in its early stages, especially when compared to fixed-bottom offshore wind.
  3. The US Department of Energy [82] estimate that in 2020 approximately 100MW of FOW was in operation globally with a pipeline of projects with with estimated commercial operation dates of 2026 or earlier totalling approximately 3.5GW.
  4. Multiple wind turbine demonstration projects are expected to come online globally through in the 2023 timeframe, with medium- to full-scale commercial projects announced for commercial operation after 2023. The majority of pipeline capacity is estimated to be in South Korea, however because most of these large commercial projects are still in the planning phase, there is a high degree of uncertainty about their economic viability and whether they will become operational or not.
  5. Despite the global pipeline for floating offshore wind tripling during 2020 to 26GW, no new installed capacity was added to the global portfolio of operating floating offshore wind farms in that year [82]. Countries pursuing significant capacities of floating offshore wind include those which are concurrently pursuing significant fixed bottom capacities (e.g. South Korea) or those with limited national seabed estate upon which to install fixed-bottom asset (e.g. Norway).
  6. As a comparison, the same report estimates total global operational offshore wind capacity at 33GW with a further 23GW under construction as of 2020, and a total global cumulative installed operational capacity of 145GW by 2026.
  7. The UK has a large marine expanse with attractive site conditions for FOW, spread across several regions including the east and north east of Scotland, near to the locations of the ScotWind lease options. As such, FOW is likely to be an important element of the Scottish and GB energy mix to meet domestic climate change targets.
  8. The Offshore Renewable Energy Catapult (OREC) is the UK’s leading technology innovation and research centre for offshore renewable energy and plays a key role in delivering the UK’s net zero targets by accelerating the creation and growth of Scottish and UK companies in the offshore renewable energy sector. OREC anticipate the first commercial-scale FOW projects (greater than 0.5GW) to be deployed in UK waters around the turn of the next decade, with an accelerated pathway commencing one year earlier but with double the annual rate of deployment [83]. The recent ScotWind seabed leasing round includes Scottish FOW projects with development timescales which are consistent with OREC's view. OREC's forecasts therefore imply that FOW is unlikely to contribute significantly to either Scottish or UK 2030 climate change targets due to the anticipated timing of delivery of the first and subsequent capacities.
  9. The development of fixed bottom offshore wind is therefore preferential to and should be prioritised over FOW development in order to deliver essential decarbonisation benefits earlier than would otherwise be the case.
  10. Further discussion is included at Section 8.4.

5.7. Conclusions on future decarbonisation

  1. In summary, despite recent commitments from government to providing continued support for the technologies, neither nuclear power nor carbon capture and storage are likely to play a significant role in furthering decarbonisation in the UK or in Scotland before the 2030s due to the delivery risk and timing constraints associated with both.
  2. Half of Scotland's existing nuclear capacity shut down at the end of 2021, leaving just one station (1.2GW) operating until (current forecast) March 2028 [74]. Current Scottish policy does not permit further development of nuclear power using current technologies, however the door is open for the Scottish government to review any new designs if they can be demonstrated to provide good value for consumers. Under current policies, Scotland will be highly unlikely to lead the way on new nuclear development in the UK, and deployment before the 2040s is also unlikely. An important piece of evidence in demonstrating the provision of value for consumers, would be the development, commissioning and operation of a new-technology nuclear plant in the UK market, something which in itself is not likely to occur until the mid 2030s.
  3. The flagship Scottish CCUS project, Scottish Cluster, is currently in a reserve position in UK Government's deployment sequencing behind two clusters in the north of England. Both of the prioritised Track-1 clusters are targeted to be operational in the mid-2020s. Therefore unless a different development path is taken, CCUS in Scotland may not deliver significantly earlier than 2030, assuming that Scottish Cluster retains its position as reserve project (and therefore could be expected to be a Track-2 cluster) and that the delivery of the Track-1 clusters remains on track, allowing important lessons to be learnt for incorporation in Track-2 clusters.
  4. In the future, more projects, potentially making use of new technologies, may come forwards into Scottish and UK decarbonisation pipelines. However potential, but not yet consented and committed projects do not provide a solid basis on which to build a plan for decarbonisation given the urgency and severity of the global challenge to constrain temperature rises within the next thirty years. The Scottish government, recognising that there is uncertainty in what its future energy system will look like, proposes to focus on what are likely to be low or no regrets options [23].
  5. The UK government recognises the prudence of planning “on a conservative basis to ensure that there is sufficient supply of electricity to meet demand across a wide range of future scenarios, including where the use of hydrogen is limited” [31].
  6. Offshore wind power generation has global momentum and is already delivering GW-scale projects in Great Britain. With appropriate compensations in place, Offshore wind is a low regret or no regret option. The Offshore Wind Sector Deal celebrates the success story of the offshore wind sector in the UK. The UK has the largest installed capacity of offshore wind in the world and costs have fallen faster than was envisaged possible 10 years ago [27]. Scotland's Offshore Wind Policy Statement notes that offshore wind is one of the lowest cost forms of electricity generation at scale, and underlines Scotland’s huge potential resource. Offshore wind will help achieve deep decarbonisation as well as reduce energy costs for the future. The National Infrastructure Commission (NIC) increased its recommended UK renewables deployment target from 50% to 65% by 2030 [84], and the Scottish Government welcomes this increase in ambition [22].
  7. The role that offshore wind has played in decarbonising GB’s electricity generation to date is clear from Table 5‑1. UK offshore wind generated nearly 40TWh of low carbon electricity in 2019, increasing to 46TWh in 2020 and 53TWh in 2022 [39, 13, 107]: a significant and consistently growing proportion of UK electricity demand. Offshore wind has undergone significant technological advances in scale and efficiency. The UK has 40% of Europe’s wind resource [40] and a significant portion of that resource is located near to Scotland's abundant coastline, to the extent that the Scottish Offshore Wind Green Hydrogen Opportunity Assessment [61] presents scenarios for Scottish installed offshore wind capacity of 36 – 80% of the 75GW UK offshore wind deployment target recommended by the CCC. It is therefore for GB to make best use of this natural, renewable energy resource in order to meet its legal carbon emission reduction obligations.
  8. With this context, the attractiveness of offshore wind, a proven technology which will deliver significant benefits to consumers through decarbonisation, security of supply and affordability this decade, becomes clear. The IPCC also stresses the importance of urgent action to decarbonise electricity generation, and the CCC have reported that the UK needs to commission more low carbon generation, and more quickly, to meet its Net Zero obligations. The deployment of new offshore wind generation is an anchor policy of the Scottish decarbonisation strategy and of the UK. The prompt development and deployment of proven technologies, such as offshore wind, is a lower-risk pathway for delivering low carbon generation both now and for the longer term and as such should be prioritised as a tangible low regrets contributor to a solution for climate change.
  9. The Project is a “low regrets” project because of its potential to produce significant quantities of low carbon energy through the deployment of a well known and well understood technology in a well known and well understood location and physical environment. It will play a major part in reducing carbon emissions from Scotland and from the wider UK, as well as facilitate a further move away from high carbon technologies and reduce costs for the future.
  10. Offshore wind is well placed to play the significant role it has been assigned in the Scottish Energy Strategy, the Scottish Offshore Wind Energy Policy Statement and at a UK level, the Prime Minister's Ten Point Plan, the Energy White Paper and the UK Offshore Wind Sector Deal.
  11. The need for the Project has been demonstrated through an illustration of its contribution to decarbonisation in Scotland and at the UK level.
  12. The characteristics which demonstrate the contribution the Project can make to Scottish and UK decarbonisation targets are: how much capacity can be delivered; when that capacity can be delivered; and how much energy that capacity is anticipated to deliver (per year). Collectively, these three numbers drive the carbon benefit delivered by the Project.
  • Offshore wind technology is well known and well advanced. It is deliverable with a very high degree of confidence. While other low carbon technologies suitable for deployment in Scotland may show promise, they have not yet have been delivered at the scale required, therefore carry potentially high levels of risk associated with their technical delivery and decarbonisation benefits;
  • The location is well understood and has been extensively surveyed. Nearby assets are also being developed and some (e.g. Seagreen) are currently being built;
  • The location is the last of the near-shore (shallower) seabed sites available including ScotWind leasing areas, which further reduces delivery risk and uncertainty associated with the project over other deeper and potentially less surveyed seabed areas (see Section 3.7);
  • The Project is therefore likely to offer the earliest potential delivery of the current unconsented pipeline of offshore wind capacity in Scotland and with a lower construction risk. Coupled with its 4.1GW capacity, the Project offers significant and timely decarbonisation benefits to Scotland and the UK in support of the NDCs;
  • Further, the quantity of low carbon power deliverable by the Development provides opportunities post 2030 to unlock and make feasible a hydrogen economy for Scotland, and therefore must be a low regret project for Scotland and also for the UK.
  1. The Project is an incredibly important scheme because it delivers significant benefits against stated Scottish and UK policy aims. Without it, Scottish and UK offshore wind targets will be much less likely to be met, and as a consequence the likelihood of meeting an already challenging Scottish (and UK) Net Zero target within the legislated timeframes would reduce, potentially to dangerously low levels.