Fifth carbon budget requires large solar deployment out to 2030

The Committee on Climate Change’s fifth carbon budget, published today, establishes that the UK would need to develop multiple gigawatts of solar capacity to meet spiralling, low-carbon demand.

The budget, which is to be legislated next year, sets out advice for the reporting period 2028-2032 as the UK continues towards an end target of reducing emissions by 80% by 2050.

Central to achieving this goal is large-scale electrification of heat and transport, which would send electricity demand spiralling. The report suggests that UK annual electricity demand could spike at 355TWh by 2030.

To meet this, alongside the phasing out of high-carbon emitting generators such as coal and retirement of other generating facilities, around 200TWh of new capacity will need to be added to the grid during the 2020s.

The report argues the 2020s to be a “crucial decade” the power sector and states that power investment must be decarbonised by 2020 if the UK is to meet its emission reduction targets, unlike heat and transport which could be decarbonised as late as 2035.

And solar, given forecasted reductions in price and the comparatively short lead time for development, would be considered a beneficial technology.

The CCC assumes that solar capacity will increase by 2.2GW between now and 2020 as development of large-scale sites slows in the absence of subsidy support, but this is then forecast to ramp up again in the 2020s as the cost of development reduces.

It forecasts large-scale solar development costs to fall from £84-96/MWh in 2020 to as low as £64/MWh in 2030, which would make it cheaper than gas generation once a market carbon price is applied. However due to solar’s intermittency an extra £10-20/MWh is added onto its generation cost.

“Favourable sites for onshore wind and solar are likely to be as cheap as or cheaper than gas-fired generation by 2020, suggesting that these projects should proceed,” the report states.

The report estimates that 1GW of new solar capacity will be added each year throughout the 2020s however the potential will be for multiple gigawatts to be installed each year. When combined with onshore wind, the two technologies could provide as much as 15TWh of generation towards the required total.

The report’s max scenario suggests that by 2030 the UK’s solar capacity could rocket to as much as 40GW – more than four times current levels – however at this range intermittency costs would approach £25/MWh.

It concludes with several recommendations for the government in order to meet these roles, principal among which is an extension of the Levy Control Framework to 2025 at least and an increase to its budget from £8 billion per year to £9 billion. A reserve auction price for solar would be set at £80/MWh.

Lord Deben, chairman at the Committee on Climate Change, said that the government would take the “next important step” towards a low-carbon economy by legislating the fifth carbon budget next year.

“That will build on its commitment to the UK’s existing climate targets and send a clear signal to businesses and consumers that UK climate ambition remains on track through the 2020s and into the 2030s.

This medium-term vision, balancing a range of considerations, helps to ensure the UK can continue to play its part at lowest cost to business and consumers while properly positioning our country for the environmental and economic realities that lie ahead,” he added.