Record levels of green energy in UK create strange new world for generators | Business

As the sun shone on millions of solar panels and unseasonable gusts turned thousands of turbine blades last Sunday, something remarkable happened to Britain’s power grid. For a brief period, a record 70% of the electricity for the UK’s homes and businesses was low-carbon, as nuclear, solar and wind crowded out coal and even gas power stations. That afternoon was a glimpse into the future, of how energy provision will look in 13 years’ time because of binding carbon targets.

On what one grid manager called “stunning Sunday”, the carbon intensity of producing power – a key measure of progress towards climate goals – dropped below the “magic number” of 100g of CO2 per kilowatt hour for the first time. That’s the level that must be the norm by 2030, according to the government’s climate advisers.

Yet last Sunday was just one of a run of striking records for renewable power in Britain that pose profound questions for conventional generators and the companies which manage power grids.

On one Friday in May, solar power briefly eclipsed the UK’s eight nuclear power stations. The grid recently went without coal for an entire day for the first time, and the dirty fuel is now regularly absent from power supply for hours at a time.

These milestones are having tangible effects. Solar power is confined to local power grids – it cannot supply the entire country in the way that a nuclear site does – but helps reduce demand by taking pressure off National Grid. That led to another first last week, when high solar and wind output pushed down the wholesale price and resulted in negative power prices, which means some conventional power plants had to pay household suppliers like British Gas to take their electricity.

“This has surprised people,” said John Feddersen, chief executive of analysts Aurora Energy Research, referring to the speed at which negative prices had arrived in the UK.

In Germany, lower power prices driven by the country’s green energy boom have wiped billions off the share prices of energy giants E.ON and RWE. But will the likes of EDF and British Gas owner Centrica, which own nuclear and gas plants, face the same fate in the UK?

uk energy mix

Feddersen argues that there are two reasons why this will not happen. One is the UK’s “capacity market”, which has been set to cope with power shortages as coal plants have closed and renewables have made supplies more intermittent. A new scheme will pay conventional power station owners £378m in subsidies this winter to be on standby and ensure the lights stay on.

The other is the payments from National Grid to fossil fuel plants for services that are vital to national power supply, such as “blackstart” – the ability to restart the nation’s power grid in the event of a catastrophic, widespread loss of energy supplies. Odd as it may sound, power station owners no longer make money out of power, but from these other mechanisms.

“This is the new world…

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