Strengthening Electricity Security and Supporting Decarbonisation

Tuesday 15th October 2024 Written Statements

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)]

I am tabling this statement to inform Members of the publication of a policy update, a consultation response, a consultation and a call for evidence on 15 October 2024. This is in support of making Britain a clean energy superpower by 2030 and accelerating progress to net zero.

The Government are committed to delivering clean power by 2030 and accelerating progress towards net zero, while ensuring the security of supply. Making Britain a clean energy superpower by 2030 is one of the Prime Minister’s five missions. To deliver this mission, we will rely even more on renewable power. The Government have set a target to double onshore wind, treble solar and quadruple offshore wind by 2030.

This will result in a wholesale shift in our long-term power system. The variable nature of renewables makes it critical that we have sufficient flexible capacity that can be ramped up quickly when generation from renewable sources is low, such as on dark, still days. The National Energy System Operator (NESO) estimates that Great Britain’s electricity system could require 40 GW to 50 GW of long duration flex capacity in 2030. This will require the accelerated deployment of low-carbon flexible technologies. The Government are already investing in low-carbon technologies to support the transition away from unabated gas.

Since its introduction in 2014, the capacity market has acted to secure sufficient capacity to ensure consistent and reliable electricity generation. The policy update that I am publishing today sets out the remaining proposals to reform the capacity market from the 2023 phase 2 consultation, aimed at aligning with the Government’s 2030 clean power and net zero goals, and improving security of supply. This document sets out policies to remove barriers for low-carbon technology to participate in the capacity market, which should accelerate investment in these technologies. This includes supporting low-carbon projects with longer build times to access support from the capacity market, enabling low-carbon technology with lower capital investment requirements to access longer-term capacity market contracts and reducing admin barriers for low-carbon technologies.

While low-carbon technologies are scaling up, we will continue to need existing flexible capacity, including unabated gas. The running hours of gas generators have already significantly reduced, and we expect that the amount of unabated gas we need will continue to decline as we deploy more low-carbon technologies. Our aim is to move unabated gas into a back-up role, primarily to ensure security of supply.

We intend to ensure that gas plants can decarbonise once low-carbon flexible technologies are available. To support the decarbonisation of unabated gas, I am today publishing a Government response to the decarbonisation readiness consultation, which will soon be followed by an accompanying statutory instrument. This will require that new build and substantially refurbishing unabated gas and other combustion power plants in England be built in such a way that they can readily decarbonise through either conversion to hydrogen-firing or by retrofitting carbon capture technology within the plant’s lifetime.

Finally, I am also publishing a capacity market consultation and a call for evidence on proposals to maintain security of supply and enable flexible capacity to decarbonise. We are seeking views on changes to the capacity market to:

Support the economic case for works to extend the life of ageing plants by lowering the scale of planned works needed to access three-year capacity market agreements;

Provide assurance that all substantially refurbishing or new combustion power plants participating in the 2026 capacity market auction have a credible plan to decarbonise before they become operational, whether through converting to hydrogen firing or carbon capture; and

Introduce exit pathways for unabated gas generators with multi-year capacity market agreements to transfer from the capacity market to bespoke support, enabling the plants to decarbonise.

These reforms will give owners and investors in gas power stations the certainty they need about future operations and their pathway to decarbonise. They come after the Government recently reached commercial agreement on the UK’s first carbon capture and industrial-scale hydrogen plants—technologies that will be critical in helping gas developers decarbonise their assets in future.

The NESO’s modelling was commenced prior to the general election and does not assume the delivery of clean power by 2030. However, these results are still likely to be informative of the level of flexible capacity that the GB system could need at this time.

DESNZ, “Capacity Market 2023: Phase 2 proposals and 10 year review—consultation”, October 2023.

[HCWS134]