The UK is progressing towards its 2030 low-carbon power goal, after a record 14.7GW of renewable capacity was secured in the latest contract-for-difference allocation round (AR7). But an unprecedented build-out of the power grid is now required, to avoid compounding grid constraint costs, the government's 2030 mission head, Chris Stark, told Argus in a recent interview. Edited highlights follow.
What does the clean power system you are building look like and how close is the UK to delivering it?
We're already on a journey, and in the first two years of this mission we've supercharged it. The first step is on the supply side — trying to build a much bigger renewable system.
Offshore wind has an outsized role because of the sheer volume of power that comes from an offshore wind farm. We've focused hard on offshore and we've just had the results of our last allocation round — a brilliant result, with 15GW of renewables capacity allocated overall, of which about 8.5GW were offshore wind.
To facilitate that you need at least two other things. The first is flexibility, in particular energy storage. You will shortly see the results of the first window of the cap-and-floor system, which is borrowed from interconnectors to give the signal to build energy storage projects. This will mainly be pumped-storage hydropower — in Scotland particularly there are lots of places to put it.
But the biggest story of all is the grid. The grid is creaking because we're trying to move quickly to a world where most electricity is coming from offshore wind, so updating the grid is absolutely essential. Last year, the energy regulator signed off on investment plans for the UK's three transmission system owners. It's a genuine once-in-a-generation grid build, to move from the old coal-based system to one that is more driven by wind. Most of that will be done pre-2030. We're essentially trying to build the plane while it flies.
German utility RWE secured around 7GW of offshore wind capacity in AR7. Does that level of concentration around a single developer pose a risk?
There is a risk, there's no question. But I get some reassurance from the way RWE approaches projects.
RWE did well but it did well in combination with other companies — much of that 7GW is in joint venture projects. And the projects are well distributed around Great Britain and its supply chain contracts in particular are in a great state. If anything, it gives us more leverage because we've got a single party to speak to.
Grid operator Neso recently told energy regulator Ofgem that 210 out of 344 projects will not receive their connection offers on time, and the first step of Gate 2 — the next phase of Neso and Ofgem's grid connection reform — has been pushed back by six months. What went wrong?
The problem is that it's hard. What we're trying to do with connection reform is genuinely radical, and it's interesting to see if other countries follow the example of the UK.
We decided to step in and do radical things quickly rather than spend years thinking about it. The queue of projects was growing exponentially, creating connection dates well into the late 2030s.
We turned national goals for each technology — offshore wind, onshore wind, solar, batteries — into regional goals, and used those to reorder the queue. This is the business end of that now. The delays are certainly not terminal to the 2030 project, but each one is a project developer that can't get connected and can't build the system we want. Over the next few weeks, I expect the transmission system owners and Neso to get that sorted. Ofgem is very upset. We're upset too. We knew there would be rough edges and felt pace was more important than perfection.
If 95pc of generation is to come from renewables by 2030, gas-fired plants will run at lower load factors and newbuilds will need higher capacity payments to be viable. What is the plan for that dispatchable capacity?
We have a 35GW legacy fleet from the so-called dash for gas in the 1990s, when we had plentiful supplies from the North Sea. Our view is pragmatic — retain all of that but use it less.
It's possible we'll need some new capacity, with the capacity market as the primary tool. But my goal is to limit that because locking in new gas use is something I think we can avoid.
The linking point is long-duration energy storage — eight hours plus — which has an outsized role in displacing gas. It's quite a big step to close a gas power station because of the back-up it gives you. The big chance is to have large volumes of storage come on line, but that is long in the future. The key is working with industry to run existing plants at lower load factors and have it outweighed by more renewables on long-term contracts and eventually nuclear.
How do you plan to manage the surge in connection requests from data centres without compromising the clean power mission?
I went to Ireland last year — there are some lessons to be learnt, mostly things not to do.
In government there are always people who want to point out the trade-offs before they happen. They say you can't have clean power and data centres. The reality is you can. Some of those projects will happen, some won't, some will happen now, some later. The key thing is to build the power system we need as quickly as possible.
There is a world that's very appealing to me, where connecting data centres actually makes the system more resilient. I would like to see them connected to our electricity grid rather than the gas grid. It's certainly the most exciting thing happening right now and we don't want to turn away any of that interest to invest in the UK.
