UK warned of risk to key net zero goal without power grid plan

The government risks failing to meet its goal of decarbonising the UK’s power sector by 2035 because it lacks a clear and comprehensive delivery plan, the public spending watchdog warned on Wednesday.

The National Audit Office said a focus on the energy crisis sparked by the Ukraine war meant ministers had made “little progress” on a long-term strategy for decarbonising power, despite having planned to release one by October last year.

In a sign of grid infrastructure struggling to keep pace with changes to the power system, the watchdog found that generators were being paid up to £62mn a day to cut output when supply outstripped demand and could not be stored.

NAO chief Gareth Davies said that since decarbonisation was “the backbone of [the government’s] broader net zero ambition”, the longer it took to produce a comprehensive plan, “the higher the risk that it does not achieve its ambitions, or it does so at a greater than necessary cost to taxpayers and consumers”.

The lack of a modernisation plan spanning the entire power system risked undermining industry and investor confidence, the watchdog said.

The government has set an ambition for all UK electricity to be generated using clean sources, including nuclear, by 2035. Greenhouse gas emissions from UK power generation have fallen by 73 per cent since 1990, according to official data, but 41 per cent of the nation’s electricity still comes from natural gas, a polluting fossil fuel.

The NAO said meeting the 2035 target would require a rapid expansion of wind, solar and nuclear power. Although offshore wind capacity has grown in recent years, the rise has been accompanied by a jump in the amount of money paid out to power generators for them to reduce output, the watchdog found.

It said “constraint costs” — which occur when generators cannot access the grid or generation exceeds network capacity or demand — had been between zero and £62mn a day since 2018. Noting that total annual charges had recently risen, the NAO warned that they could increase further “if network capacity does not keep pace with electricity generation expansion”.

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Experts said the grid network could distribute only so much before overheating or overloading, adding that it was designed for a smaller number of large power stations, rather than the more complex structure of many smaller generators, such as wind and solar farms.

Chris Hewett, head of industry group Solar Energy UK, said a lack of rapid grid investment was “probably the big constraint for solar and energy storage”.

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“Capacity in the grid is now an economic growth constraint,” he said, adding that “billions of pounds” worth of solar power projects had already obtained planning permission but would not be able to launch for years.

In its report, the NAO called on the new Department for Energy Security and Net Zero to outline an overall decarbonisation plan, bringing together the various power sector and network goals and explaining how they would be met. Progress on the plan should be reported annually to parliament, it said.

The energy security department said its focus during the energy crisis had been “delivering essential cost of living support”, adding: “We haven’t taken our foot off the pedal and our commitment to decarbonise the UK’s electricity system by 2035 remains resolute.”