Government confirms coal close-down by 2025, plus new clean energy investment

The transformation of Britain’s electricity generating industry continues, with the government having confirmed its commitment to seeing all ‘unabated’ (ie without carbon capture equipment) coal-fired power stations closing by the year 2025, as well as its plans to spend £730mn in support for renewable electricity projects over this parliament.

It also plans to set out further details for the next Contracts for Difference (CfD) auction, where companies will initially compete for £290mn worth of contracts for renewable electricity projects.

The second CfD auction will result in enough renewable electricity to power around one million homes and reduce carbon emissions by around 2.5mn tonnes per year from 2021/22 onwards, says the government. It will also allow developers of innovative renewable technologies to deliver the best deal for bill payers. For example, the maximum price for offshore wind projects is now 25% lower than was set for the last auction, and a competitive auction could bring that price down further.

The government says that its plan to phase out electricity generation from unabated coal-fired power stations within the next decade will provide confidence to investors that the UK is open to investment in new, cleaner energy capacity, as the system transitions from coal to gas. A more diverse energy system, which includes record investment in renewable technology and the reliable electricity that new nuclear power investment will provide, will give greater security of supply.

Business and Energy Secretary Greg Clark said: ‘We’re sending a clear signal that Britain is one of the best places in the world to invest in clean, flexible energy as we continue to upgrade our energy infrastructure. This is a key part of our upcoming Industrial Strategy, which will provide companies with the further support they need to innovate as we build a diverse energy system fit for the 21st century that is reliable, while keeping bills down for our families and businesses.’

The government first announced its intention to take unabated coal out of the energy mix in November last year, but coal’s contribution to UK electricity generation has been falling for some time – from 30% in 2014 to 22% last year. Indigenous coal production was down a quarter in the same period, meaning that most of the coal burned in British power stations is imported.

The most visible example of the transformation of UK power generation has to be the giant, 4 GW Drax power station in Yorkshire. The once coal-fired power station was Europe’s largest single source of carbon emissions until recently, but is gradually switching from coal to biomass. The plant still generates around 7–8% of the UK’s electricity, but 70% of this burning compressed wood pellets. The company says that Drax is now one of the UK’s largest producers of renewable power and Europe’s single largest decarbonisation project.