Barriers to investment in new gas will be addressed as the Government confirmed the major role gas will continue to play in supporting significant decarbonisation of the power sector by 2030.
The Government confirmed a number of steps that would be taken to stimulate investment in gas generation in its Gas Generation Strategy.
As part of a massive construction programme. new gas-fired power stations (which emit half the CO2 of coal) will need to be built over the next two decades to replace retiring coal, older gas and nuclear power stations.
Gas will also be required to support a low-carbon electricity sector, providing the flexibility to balance out increasing amounts of wind and nuclear energy.
Secretary of State Edward Davey said: “We have always said that gas will have a significant role in our electricity mix over the next two decades – this is not new.
“Gas will provide a cleaner source of energy than coal, and will ensure we can keep the lights on as increasing amounts of wind and nuclear come online through the 2020s.
“The strategy we set out today follows extensive consultation and is consistent with meeting our legislated carbon budgets and with significant decarbonisation of the power sector.”
Up to 26GW of new gas generating capacity could be required by 2030. The bulk of this will be used to replace retiring coal, nuclear and older gas capacity, so it is expected there will be a net increase of around 5GW.
This is consistent with significantly reducing emissions from the power sector in order to meet Carbon Budgets.
Gas could play a more extensive role, with higher load factors, should the 4th Carbon Budget be revised upwards after the Committee on Climate Change has provided advice on this in 2014.
The Government has announced measures to provide market certainty for gas investors and to ensure fair competition.
But the Renewable Energy Association was critical of the announcement. On George Osborne’s assertion that gas is “lower cost” and the measures to support shale gas exploration, Renewable Energy Association chairman Martin Wright commented: “The Chancellor must understand that gas is not cheap, nor does it offer stable pricing in the future. It has been by far the major driver of energy bill increases in recent years, and there is no evidence for the presumption that shale gas will have the same impact on prices here as it has in the USA. Moreover, increasing demand from other economies will undoubtedly drive prices and volatility.
“The Strategy’s anticipated cost of capturing and storing the carbon emissions from gas in the 2020s is higher than nearly all renewable sources of power. So why is there such an emphasis on this technology?
“Ironically we are getting a cross-departmental Office for Unconventional Oil and Gas, when what the UK needs is an effective cross-departmental Office for Renewable Energy Deployment.”
On the impact of the Gas Strategy for carbon and climate objectives, he said: “Osborne and the Gas Strategy launched today show that the UK doesn't seem to be able to break its habit on fossil fuel, even as the Climate Change Ministers negotiate in Doha. The announcements today send a clear signal about the Government priorities and investors will respond to that.
“The UK has some of the best renewable resources in the world, which are totally sustainable and which offer stable low-cost energy in future - we should prioritise exploiting those.”
On the effect of today’s announcements for investor confidence in the renewable power sector, he added: “What we needed today was an assurance that gas would play an important short to medium term role, supporting renewables in the transition to a low carbon energy future. Instead gas has been placed centre-stage. It is vital that the Renewable Energy Roadmap, expected to be published next week, maintains investor confidence in renewables.
“Contrary to the current zeitgeist, we remain of the view that long term decisions have to be made. We are firmly of the view that climate change remains an issue of central importance and we have a responsibility to future generations. The whole tenor of this announcement suggests a fundamental failure to accept the scientific evidence on climate change.”
Renewable gas, from anaerobic digestion and gasification technologies, could play a vital role in the UK’s gas future, but is not acknowledged in the Gas Strategy. REA Head of Biogas David Collins said: “It is disappointing to see no mention of renewable gas in the Government’s Gas Strategy.
“This represents a missed opportunity to celebrate the genuinely good work the industry and Government is doing on the ground to overcome the barriers to injection of biomethane into the gas grid.
“National Grid estimates that biomethane, if exploited fully, could provide around 25% of the UK’s residential gas supply. Renewable gas can make a vital contribution to boosting the domestic security of our gas grid. It also has excellent emissions and landfill displacement properties and provides tremendous economic opportunities for farmers and small businesses.”
