Solar looks set to play a “significant” role in the future of the UK energy market but faces questions over the problems caused to the grid by its intermittency, a report compiled by Energy UK has found.
Earlier this week industry body Energy UK published its ‘Pathways to 2030’ report which details how the government could collaborate with the domestic energy industry to ensure it meets climate goals while delivering energy security.
Compiled with consultancy giant KPMG, the report states that the growth of decentralised energy systems will become prevalent out to the 2030s, with solar-plus-storage the obvious front runner.
Costs associated with solar PV and storage systems will continue to fall over the next decade, bringing them to grid parity within the next few years. This, the report argues, will lead to accelerated deployment and uptake of a more decentralised energy market with less importance placed on large generators such as EDF’s controversial Hinkley Point C project.
But the report argues that as decentralised generators become more pervasive, households with them would not be contributing as much to grid operation costs by generating and consuming their own energy.
Energy UK cited several interviewees in stating that “increased decentralised energy came with system costs and system benefits, and noted these needed to be considered when defining government strategy”.
The wider network costs associated with providing back-up generation to domestic and commercial premises has been referenced before. During her energy reset speech last November, Energy secretary Amber Rudd hinted towards a possible charge for renewable generators to compensate for intermittency issues on the grid.
The report calls for the government to “undertake a review to identify an appropriate charging regime that is reflective of the costs and benefits decentralised energy brings to the system”.
Despite the problem, Energy UK was bullish in its claims that solar will continue to thrive and grow in importance despite recent cuts to subsidy support. It cited several contributors to the report in suggesting there were fears that the magnitude of the cuts threatened to “kill the industry off”, but all stressed that as technology costs continued to fall solar would remain viable.
Energy UK has however called on the government to completely reform the much-maligned Levy Control Framework “as a matter of urgency”. It has stressed the need for the LCF to be “open and transparent”, and its extension for the period from 2020 to 2025 to include “public revisions” for fluctuations in the wholesale energy price to allow the industry to prepare.
As the UK’s wholesale energy price has fallen, costs of subsidies have risen particularly under the Contracts for Difference scheme. This has been a significant contributing factor in the LCF’s overspend, used by the government to justify last year’s subsidy reset.
Lawrence Slade, chief executive at Energy UK, said that the UK energy industry had to work alongside government to “develop a holistic approach to policy”.
“We are already seeing new reliable and renewable sources of energy coming on stream while working with customers will continue to drive innovation putting power in the hands of users to deliver warmer and more energy efficient homes.
“This is an exciting time for the energy industry. The next ten years will see many changes for the better, putting customers first and in control of the energy they use,” he said.