A new report by a group of industry experts has dispelled the myth that the Government cannot introduce a coal phase-out policy because coal power stations are needed for security of supply.
The report considered what would happen if all coal plant closed once existing capacity contracts expire. It found that the capacity resources that are available through market responses and contracts with National Grid far outweigh any capacity deficit that would be created. This demonstrates that the electricity system is currently extremely robust, even to large losses of capacity.
Simon Skillings, Director of Trilemma UK Ltd and an author of the report, said:
Coal-fired power stations will have to close if we are to deliver our decarbonisation objectives. Even the latest Government projections assume this will happen by the mid-2020s. Our analysis shows that this could happen earlier without disruption to security of supply, thanks to existing mechanisms under the management of National Grid.
The real security of supply challenge into the longer term is to ensure that sufficient low-carbon replacement resources are brought forward. This can be achieved most effectively by giving greater clarity as to when coal plant closures will happen and implementing targeted mechanisms to make sure the new resources are in place.
There are currently around 19GW of coal-fired power plant operating on the British electricity system. All of these power stations must decide whether to invest to reduce emissions of pollutant gases over the next few years as a result of European environmental legislation. If they decide not to make the necessary investment then they must close by 2023 at the latest. The report considered what would happen if all of this capacity closed by 2021 and replacement capacity was not immediately available. Even under this extreme scenario, the analysis showed that there was a negligible chance that customer supplies would be affected.
The report therefore recommends that the Government introduces regulations that prevent coal plant from operating after 2023. It also proposes that coal plant should not be eligible for payments under the recently introduced capacity mechanism, as this increases the risk of further life extension and crowds out investment in alternative low-carbon generating capacity.
Commenting on the report, Chris Littlecott of E3G said:
This timely analysis provides a much-needed challenge to lazy thinking on security of supply. With the General Election in sight, it is essential that political parties and civil servants properly prioritise. The UK capacity market is throwing good money after bad, and wasting public money keeping old coal power stations open. This report clearly shows that the UK can make a managed transition out of unabated coal, providing a clearer market signal for investment in low-carbon generation and smart, consumer-oriented technologies.