The government should not step back from plans to phase out coal-fired generation in the UK, as concerns that it will leave the country short of power are unfounded. That was among the conclusions of a new report from the Institute for Energy Economics and Financial Analysis (IEEFA).
The report, Electricity-grid transition in the UK said that the UK system had coped well with a 60% fall in coal-fired supply over the past year. If the UK delivers on its current plans for new power plant, including renewables, and interconnection, it can continue with the coal phase-out.
The report said the Capacity Market had failed to bring forward new large plant, but said it could be ‘repurposed’ to bring forward new-build, flexible generation, including gas peakers, storage and demand side response. Alongside, “a strategic reserve of ageing power plants, which would otherwise be mothballed, could be retained”.
The report says repurposing the CM is one of three steps the UK should take to build the flexible power system it wants. In addition, “A strong first step would be for the UK to honor its commitment to fulfilling a project pipeline of renewable and especially offshore wind development, combined with a commitment to improve interconnection.” Those projects would be “a backbone for a new energy grid”.
Finally, it called on the UK to continued reforms of the balancing market to strengthen price signals. It said, “Reforms to the balancing market could extend to shortened settlement periods from 30 minutes to 15 minutes, following a trend already established in continental Europe.”