Government will get close to achieving their clean energy target for electricity

But maybe the most important question is whether there is room for the renewable energy programme will continue after the target is achieved

Most attention on Labour’s efforts to reach its target of achieving 95% of UK electricity generation from non-fossil sources is focused on whether this will happen by 2030. But a lot of the renewable energy schemes given contracts by the time of the next General Election will not be implemented until 2032-33. By then 100 per cent of UK electricity consumption is likely to be met by non-fossil sources. But what happens to decarbonisation after that? Electrification policies that will boost the market for renewables need to be given a boost, otherwise the renewable energy programme will slow down.

According to my calculations, 86% of electricity will be from non-fossil sources by 2030-2031. However, assuming Miliband carries on handing out renewable energy contracts at the rate with which he has begun, the Government will achieve 100 per cent of electricity consumption from what it calls clean energy by 2032-3. This will still be balanced by some gas generation - around 5 per cent of total generation. The reason that substantially more renewable energy will be generated in 2033 rather than 2030 is that a lot of schemes given contracts by the Labour Government will only be implemented in the 2031-2033 period.

That’s the good news. The bad news is that there is a lurking danger that most renewable energy development will then end. That is because decarbonisation (especially of heat) is simply not happening quickly enough to create a market big enough for continued major renewable electricity expansion. Of course this should not happen, and I am optimistic that renewable energy development will continue to flourish. But we heed a sharp change in Government policy to expand electrification.

The transition from fossil fuel to Electric Vehicles looks like it will move forward broadly on target. However, the sheer efficiency gains of EVs mean that the increase in electricity consumption required for this is far smaller than may be believed. There is a lot of wasted burning oil used in petrol and diesel engines. Decarbonisation is just not (yet) happening fast enough in other sectors to sustain anything like the size of the present renewable energy programme beyond the year 2032.

The Government’s renewable energy programme

The Government now issues annual rounds of auctioned quantities of ‘contracts' for difference’ (CfDs) for different renewable energy contracts. These are called ‘Allocation Rounds’. Quantities of capacities for different renewable energy technologies are auctioned off to developers. Those developers who bid the lowest prices (to be paid per unit of generated electricity) win the contracts. The contracts last 15 years from the date of project commissioning.

In 2024 non-fossil sources provided 56 per cent of UK electricity. In Government parlance, non-fossil is effectively the same as ‘clean’ energy, although critics of both nuclear power and many biomass sources would disagree. But since it is the Government target we are discussing here, I shall apply the analysis using the Government’s interpretation. Personally, I only describe wind, solar, water and biogas (from waste) sources as being green energy.

Hence if the Government achieves its target, the UK will source 95 per cent of its so-described ‘clean’ energy from wind/solar/hydro/biomass/nuclear by 2030. There may be a bit of justifiable slippage on the target. First, the plant commissioned in 2030 itself will not be generating for the whole year, so arguably a 2030-31 measure should be allowed to capture them. Less arguably, but still relevant, schemes given contracts by the Labour Government will still be deploying in substantial generating quantities by 2033.

That is, if we assume that the government will still be in power in the autumn of 2028, This means they will have issued rounds of contracts in 2024, 2025, 2026, 2027 and 2028. Only plant given contracts by 2026 are almost certain to be deployed by the end of 2030.

Model assumptions for future demand

If I am going to look at how far the Government will meet its 2030 clean energy target then we have to discuss how much electricity demand there is likely to be in the future. Hence the first assumption of my model will be about the level of electricity demand in 2030 to 2035. In retrospect, most of the governmental analyses get future projections wrong by projecting larger increases in demand than whatever happens in reality. In 2006, for example, the Government projected substantial increases in electricity demand, but in fact electricity demand peaked in 2005 and has since declined by over a quarter. See my post HERE on ‘Why does electricity demand keep declining’.

The contribution to increases in electricity demand from data centres in the UK has been much hyped but has been overblown in my opinion, and the net result could well be savings in electricity consumption. Please see my blog post HERE. This discussion about the supposed data-driven rapid increase in electricity demand has distracted attention from the fact that electricity demand has declined, and indeed fell again in 2024 according to an analysis produced by NESO (see Chart 1 below). UK electricity demand contracted again in 2024 to around 269 TWh. As a whole, non-fossil fuels constituted around 56 per cent of total election used for consumption, whereas wind solar and hydro supplied about 35 per cent. The exact percentages for each energy technology in 2024 can be seen in Chart 2.

Chart 1 Recent UK electricity generation

Chart 2 Per cent of electricity supply by different fuels

Source for Charts 1 and 2: NESO Energy Data Energy Portal See HERE

There are big pressures to expand future electricity demand because of the planned decarbonisation of transport, heating and industry. According to the Committee on Climate Change this programme should increase 2024 levels of electricity production by over 130 percent, to 645 TWh by 2050. Some analyses would put this figure rather higher.

However, in practice this is not happening very fast, or at the moment, at all! This is partly because heat decarbonisation (in buildings and industry) is happening only very slowly. The Government have (erroneously in my view) decided that it is all too difficult to push things very fast. Even if a million homes are fitted with heat pumps between now and 2032 (say half old, half new) this would still boost annual electricity demand in 2032 by only around 3 TWh. That is about all I see happening in the building heating sector on the basis of current policies.

The switch to buying EVs amongst purchasers of new cars and vans will happen much more quickly and will have much more effect on emission reduction. Yet even this does not mean a rapid increase in electricity demand. That is because motor vehicles last 15-20 years on average.

Hence only a relatively small addition to electricity demand comes from new EVs each year. This is even as all new cars and vans are EVs from the year 2030. EVs are very energy-efficient compared to a petrol or diesel car. If all new cars and vans in a given year are EVs this will add around 5 TWh of new demand each year from 2030.

All of this adds up, according to my calculations, to around 8 per cent increase in 2030 electricity consumption compared to 2024. This would raise UK electricity generation to around 290 TWh. In 2030 to 2035 I assume that electricity demand will increase by around 6 TWh a year. This would raise UK electricity generation to around 320 TWh by 2035.

On the other hand, NESO has estimated an 11per cent increase in UK electricity demand by 2030 compared to 2024 (see HERE). Whether demand is as strong as this depends on the degree to which energy, especially gas, prices decline over the next few years. This is as Europe develops new gas import infrastructure to replace Russian gas, as global LNG supply increases, and of course, as Europe cuts down on gas use.

Sebastian Kennedy’s analysis implies gas prices could begin to fall significantly sometime in 2026 as the international LNG market turns to surplus (see HERE). Set against there is a likelihood that in 2025 and 2026 electricity demand will be flat, if not even lower than in 2024. Hence the increase in energy demand generally in the UK could still be very modest by the year 2030.

Model Assumptions for wind and solar generation

Please note that this model is not a description of what ‘should’ happen. It is merely what is a plausible assumption based on current Government policy practice and the state of the renewable energy market structure. This revolves around the way that the Government issues generation contracts (contracts for difference or CfDs) for renewable energy through annual Allocation Rounds.

I am using historically based production factors for the different renewable energy technologies - that is so-called ‘capacity factors’. My data on future renewable energy capacity additions is drawn partly from 1) the Government’s announcements about its allocation rounds of renewable energy contracts, for example Allocation Round 6 in 2024 (see HERE) 2. the Government’s Renewable Energy Planning Database (see HERE) and 3. other databases such as those maintained by RenewableUK (see HERE).

A very important set of assumptions involves capacity factors for the different technologies. These indicate the amount of energy will be generated in an average year compared to what would be the total if the plant were generating at full power all the time. I assume 43 per cent capacity factor for offshore wind (a figure which is gradually improving), 26 per cent for onshore wind and 11 per cent for solar pv. My model of electricity projections takes on board these criteria that I have described. Please note that I assume, in the capacity factors that I use, that these capacity factors express what the projects can sell through the electricity system (ie net of transmission losses).

In 2024 wind, solar and hydro made up 95 TWh, or about 35 per cent of UK electricity generation. I assume that the Government’s remaining annual CfD auctions offer much the same quantity of renewable energy contracts as were issued in so-called Allocation Round 6 (AR6) in 2024. This entailed, in effect, roughly 4000MW worth of new funding for offshore windfarms (note: a simple summary of a more complicated funding package). It also involved funding of nearly 1000 MW of onshore wind and nearly 3300MW of solar pv, plus a small amount of tidal stream (see HERE).

So I assume that the 2025, 2026 2027 and 2028 CfD funding rounds will each involve 4000MW of offshore wind, around 3000MW of solar pv and 1000MW of onshore wind. I also assume that current rates of around 900MW of annual deployment of rooftop solar are continued indefinitely. I emphasise that these figures involve projects that have either already received planning consent or that will be given planning consent given the number of projects waiting in the planning consent queue. My figures probably understate solar pv expansion to an extent because some solar farms are being built without using CfD contracts (see HERE), and rooftop solar may expand more rapidly than so far.

Indeed, if planning consent alone is taken for deployment criteria, then a lot more renewable energy deployment would be taking place than is reflected in my projections here. I have previously discussed how there is a very large capacity of batteries planned for the electricity system to support this increase in variable renewable energy generation. See my post (HERE)

Please see Chart 3 for how offshore wind capacities are distributed according to when they are being constructed.

Chart 3

Offshore windpower build-up

Chart 4 Relative shares of production from solar pv, onshore wind and offshore wind

Please see Chart 4 for the balance between generation from onshore wind, offshore wind and solar pv according to the quantities of electricity (in TWh) they will be producing by the year 2033. Around 13 per cent of UK electricity generation will be from solar pv, 16.4 per cent from onshore wind, and 56.4 per cent from offshore wind. This adds up to 86 per cent of total electricity production, but this, of course, does not include production from natural gas, biomass and nuclear power. In contrast to 2024 when 16 per cent of electricity was imported, around 5 per cent of UK production will be, on my model, available for export in 2033.

Nuclear, Biomass and Gas

Nuclear power generation has been running down as some older power plant are retired. I am assuming that from 2030 all the currently operating power plant apart from Sizewell B will have stopped generating. However, Hinkley C is being built. This is very behind schedule, but, it could come into full generation in around 2034-2035. I assume this is the case in this model. This will partly restore the level of nuclear generation.

I am also assuming that the Government will stop funding Drax biomass plant given the great expense that this involves - not to mention the controversy about how low carbon the tree burning done by Drax is. However, my analysis of the energy from waste schemes either under construction or planned suggests the the loss of generation by Drax will be compensated by new generation from new Energy-From-Waste plant.

Residual gas will also be needed to balance the system. I estimate this as five per cent of total wind solar and hydro generation. A lot of this will be provided by gas engines recruited under the Government’s ‘capacity mechanism’ incentive system. It should be borne in mind that the contract which was awarded to Hinkley C by the UK Government encourages the power station to generate electricity whether or not there is a surplus on the UK electricity system. This will promote wastage of renewable energy. The Energy From Waste plant that will come online are not low carbon. They will also displace other renewable energy generation sources.

Chart 5 below gives totals for UK electricity generation and consumption and also breaks down generation figures between technologies. The production over and above what is needed for consumption is put in the column marked exports. It should be noted that when Hinkley C comes online the total generation will already be more than what is needed for UK electricity consumption, and Hinkley C generation will increase this amount. I have not included any specific allowance for electricity from carbon capture and storage (CCS) systems. I am assuming there will be very little of such capacity, despite the amount of money being given to the fossil fuel industry for such purposes.

Chart 5 Projected changes in total and shares of electricity generation from 2024 to 2035

Chart 6 shows how the different targets are being achieved. The way the Government’s ‘clean energy target’ is defined includes all non-fossil fuels. This target will be around 86% achieved by 2030-31 in terms of a percentage of UK electricity consumption. But it will be more than 100% achieved in 2033 and also in 2035.

Generation will exceed consumption, meaning that some energy should be exported or stored (although as yet there is not much action on long-term storage). The bars in Chart 6 do not include the residual gas used for balancing which adds another 5 per cent or so compared to total electricity consumption, producing a net excess of generation from 2032 onwards. The proportion of renewable energy meeting total electricity consumption falls in 2035 compared to earlier because Hinkley C comes online roundabout then.

Chart 6 How far are non-fossil and green energy targets reached?

The End of the Renewables Programme?

It is reasonable to worry that a right-wing Government will succeed Labour in 2029 and more or less end the renewable energy programme. However, on current trends the sheer lack of moves towards decarbonisation outside the electricity and electric car market may spell the end of the renewable energy programme regardless of the shape of the next Government. That is because there simply may not be a market for renewable energy after 2032 - that is assuming that Miliband’s plans are implemented as set out here, but that more substantial moves towards decarbonisation are not taken.

Failure to decarbonise heating will stop renewables growing

Heating makes up nearly two-fifths of UK carbon emissions (see HERE). The largest part of heating is in space heating followed by industrial heating. The failure to make significant progress in decarbonising heat threatens to end the renewable energy programme.

If the market for electricity does not increase very much, then the market for renewable energy will not grow. No heat decarbonisation = little more new renewable energy plant. More nuclear power through the planned Sizewell C will make this situation worse for the renewable energy industry, although Sizewell C is unlikely to be online for a long time.

In 2019 announcements were being made about how gas heating would be phased out in favour of heat pumps, not just in new buildings but also pretty much everywhere by 2035. Now all that seems to have been dropped or put on the back burner. Even the commitment to introduce mandatory heat pumps in new buildings looks wobbly (see HERE).

There has been some talk of generating hydrogen from renewable energy via electrolysis. However, little is happening about this given the ineffectual nature of the Government’s hydrogen strategy. But this could change dramatically with the right approach, as I explain in this post HERE.

Conclusion

It should be clear from this that Miliband is likely to reach his clean energy target, albeit a couple of years late. This assumes that the present momentum of his renewable energy programme is continued. Indeed, if Drax is allowed to continue into the 2030s then this plant will displace wind and solar pv.

Clearly, also, we need to put a lot more attention into moving the dial on decarbonising heating. We can marvel at the extent to which renewable energy makes up most of the electricity production soon after 2030. However, that is limited by the fact that electricity still only supplies a relatively small part of final consumption. We need to put a lot more effort into heat decarbonisation, that is for sure. I shall explain how to do pursue this electrification in future posts.