Solar subsidy cuts will deny UK industry reduced wholesale electricity prices

In the wake of renewable subsidy cuts, the UK will struggle to match Germany's falling wholesale electricity prices, according to a new analysis.

The study suggests that while offshore wind power is rising exponentially in the UK, Government cuts to renewable energies, particularly solar and onshore wind power, will mean the country will fall even further behind Germany, the country closest to its targets for all-renewable energy production.

Professor Keith Barnham from the Department of Physics at Imperial, co-author of the analysis published today in Nature Materials, says that a focus on renewable power generation should be a priority during the upcoming COP21 climate summit in Paris.

The study looked at how a range of countries are progressing towards an appropriate mix of renewable technologies. What is ‘appropriate’ depends on the demand and the potential supply of energy types available in a country that would lead to a stable and reliable grid.

For example, the UK daytime electricity demand peaks near midday, when solar power will also be at its peak, making this a good choice. But the mix also needs wind, which is more abundant in the UK than in Germany, and back-up from biogas electricity, which can be accessed at any time.

Wholesale windfall

At present, Germany has so much cheap solar and wind powered electricity that the wholesale electricity price has fallen 37 per cent in the last four years. Much of German industry does not pay the levy that supports renewable energy so that they also benefit directly from this price fall.

However, recent UK Government cuts to renewable energy subsidies will slow the “impressive” growth in the renewable sector, according to Professor Barnham. “The all-renewable electricity company Good Energy has just shown that, thanks to renewables, the wholesale electricity price started falling in the UK in 2014 as it did in Germany in 2011. Our data shows we were catching up with the Germans but the renewable subsidy cuts will mean we will fall even further behind,” he said.

“Cuts will not only threaten more than 20,000 jobs in the solar sector, including those of many ex-Imperial students, it will as also halt in its tracks this wholesale electricity price fall and disadvantage  UK industry as a result.”

Renewable proposals

“I would like to see the Government re-introduce the renewable energy subsidies through tax relief as they do the much larger fossil fuel subsidies, rather than as levy that adds to the wholesale price," he added. "That way, domestic and industrial electricity users will benefit from the further wholesale price falls which we can expect when the renewables resume their exponential rise.

“If they continue to expand as they were doing, there would be no need to build new nuclear power plants. Nuclear is supported by a levy which will get much bigger as the wholesale price continues to fall.”

Professor Barnham suggests that all countries should carry out projects like the one led by his German co-author. A computer programme matched the electrical power demand on the German grid all year with the real-time output of wind, solar and biogas electrical power generators in order to determine the most appropriate renewable power mixes.

The authors also propose an environmental emissions limit that would mean that the only new electricity generators built would be renewable ones. They conclude that this would be the quickest, cheapest and safest approach to reduce carbon emissions from electricity generation.

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'Recent progress towards all-renewable electricity supplies’, by Keith Barnham, Kaspar Knorr and Massimo Mazzer is published in Nature Materials.