Wind Energy Market Analysis in UK

Introduction

The energy market in The United Kingdom has seen rapid changes during last few years in line with global energy market trends experiencing a thoughtful transformation, bringing about challenges to the design of energy and climate policies and energy markets. Wind energy in The United Kingdom has gained the highest portion of investment and focus achieving the highest share of wind energy in Europe. The Wind energy projects in UK are undergoing significant changes towards achieving the governmental plan of 39 GW by 2030.

Onshore and Offshore Wind Energy

United Kingdom is the biggest offshore and onshore wind market in the world. By 2013, offshore wind installments haven increased by to 3.5 GW in 2013 with a massive production capacity to 11.5 TWH by the end of 2013. In addition, onshore wind installments rose from 5.4 GW in 2012 to 7 GW by the end of 2013 with a massive production capacity to 14.2 TWH by the end of 2013. UK has launched the operation of the largest onshore wind farms in Whitelee with a generation capacity of 539 MW and in Fallago Rig with a generation capacity of 144 MW (UK Renewable Energy Roadmap Update, 2013).

The United Kingdom has increased the wind capacity by 2.7 GW by a capacity generation of 31.5 TWH with total power of 13.6 GW by the end of 2015 representing 9% of total electricity supply for the whole country. Onshore wind energy has significantly increased its power generation by 19.4% from 3.8 TWH in the third quarter of 2015 to reach 4.6 TWH in the third quarter of 2016. Offshore wind energy has also contributed an increase by 3.8% from 3.4 TWH in the third quarter of 2015 to reach 3.5 TWH in the third quarter of 2016. (National Statistics Energy Trends: Renewables, 2017).

In 2017, the 98.9TWh generated by renewable sources was up nearly a fifth year-on-year, with the increase due to greater capacity and higher wind speeds. This figure is also nearly four- and-a-half times the 22.6TWh generated by coal last year. Onshore wind generated 28.7TWh last

year, up 37% on generation from a year earlier, while offshore projects produced 20.9TWh – an increase of 27.3% year-on-year. One of the main Wind Energy achievements by The United Kingdom government is that UK built half of Europe’s offshore wind power in 2017.

The below figure illustrates the increase year over year of the renewable energy generation in The United Kingdom.

The below figure illustrates the share of The United Kingdom in the Global Wind Energy installed and operated worldwide by the end of 2017.

In 2018, The United Kingdom has achieved one of the great targets in its history through the Wind farms providing more electricity that its nuclear power plants. Between January and March, wind power produced 18.8% of the UK’s energy needs, compared to nuclear energy

produced 18.76%. In March 2018, Wind power in the UK has set a new record today by generating 14 gigawatts for the first time representing 37% of the country’s electricity. Until today, The United Kingdom has granted Wind projects in the pipeline with total amount of 15.864 GW. The United Kingdom government is expecting to double the Wind Power installation by 2030.

UK Policy and Regulations for Wind Power

CFD Mechanism

Contract for Difference (CfD) has been initiated in UK since October 2014 to overcome Renewable Obligations. It is designed to support distribution of large scale renewable projects more than 5 MW

The Contract for Difference mechanism is based to pay for the difference between the market price and the strike price for a period of 15 years. CfDs are established between the energy company supplier and the government. This mechanism is currently in place in Great Britain, and Northern Ireland with a plan to be covered in other areas.

Electricity Market Reform (EMR):

Electricity Market Reform is a package of reforms for the electricity sector of UK introduced in April 2013.

The main four measures regulated and introduced by the EMR are:

• Contracts-for-Difference
• Capacity auctions set a market for future capacity.
• Emission Performance Standard (EPS) is an emission cap for new power plants and banned the construction of non-CCS coal plants.
• Carbon Price Floor (CPF) designed to be gradually increased (starting from 2103) and augment EU carbon price. The CPF was set on the level of GBP 15.70 per CO2 tonne in 2013 and to be increased to GBP 30 per CO2 tonne by 2020.

Feed In Tariff:

As of April 2010, the UK government offers feed-in tariffs (FITs) for small-scale (less than 5 MW) low-carbon electricity produced from a variety of renewable energy technologies installed by householders, businesses and communities, even if the electricity is not fed back into the electricity grid but consumed on-site. Additional payment is provided for electricity fed into the grid.

• FIT levels very according to technology and size of the plant.
• FIT payments last for 10 to 25 years and are adjusted for inflation.
• Electricity suppliers are responsible for paying the FIT to the eligible generators.
• Feed-in tariff rates for new installations are adjusted on a quarterly basis for PV and non-PV generators.

UK Wind Energy Future Plans

Under the EU Directive 2009/28/EC, member countries of the European Union were obliged to draft, and submit to the European Commission, National Renewable Action Plans (NREAPs) outlining pathways that will allow them to meet their 2020 renewable energy targets.

UK targets by 2020:

• 15% share of energy generated from renewable sources in gross final energy consumption;
• 12% of heat consumption met by renewable sources;
• 31% of electricity demand met by electricity generated from renewable energy sources;
• 10% of energy demand met by renewable energy sources.The UK renewables policy framework relies on three main components:

• Financial support for renewables;
• Removing barriers (administrative, policy uncertainty, etc.);
• Supporting and developing emerging technologies; Measures that will allow UK to achieve its targets:

• Continuation of the Renewables Obligation (RO)
• System of feed-in tariffs
• Introduction of Renewable Heat Incentive (RHI)
• Cooperation with the European Investment Bank (EIB) and the Green Investment Bank for funding provision for renewable projects.
• Support to R&D in the sectors of renewable energy technologies and energy efficiency.
• Continuation of financial schemes providing support to various technologies in different sectors; As a result of the great enhancement and booming of the wind energy in The United Kingdom, the government has launched a long term policy for innovation and investment in the

wind energy. The innovation aspects consider the enhancement of energy efficiency and to reduce the cost for consumers. The government plans indicate the installation of 16 GW from wind energy by 2020. Achieving the cost reduction of wind energy, it has been proved that the benefit rate has risen from £ 1,000 per MW to £ 5,000 per MW over the life time of the wind farm. (Renewables 2016 Global Status Report, 2016)

Conclusion:

Offshore wind energy is the most promising source of energy for electricity supply and carbon emission reduction. Offshore wind energy farms are the key of success to achieve this target as UK is one of the best places to invest in wind energy. United Kingdom has been considered as the most attractive for offshore wind energy investment. In February 2013, the UK government had announced the extension of 17 offshore wind turbines for the Kentish Flats Offshore Wind Farm, one of the first offshore wind farms installed in UK. In addition, the government has promised the construction of 504 MW Galloper Wind Farm off the coast of Suffolk (UK Renewable Energy Roadmap, 2013). Until now, UK has successfully achieved in their pipeline about 15.864 GW. UK plan shows the potential of deployment of up to 16 GW of offshore wind plants by 2020 and up to 39 GW by 2030.

References

D. B. E. I. S. (2017, February 9). National Statistics Energy Trends: Renewables . Retrieved from https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/579527/Renewabl es.pdf

D. E. C. C. (2013, November 5). UK renewable energy roadmap: 2013 update. Retrieved from

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/255182/UK_Rene wable_Energy_Roadmap_-_5_November_- _FINAL_DOCUMENT_FOR_PUBLICATIO___.pdf

R. E. N. C. (2016). Renewables 2016 Global Status Report. Retrieved from

http://www.ren21.net/wp-content/uploads/2016/10/REN21_GSR2016_FullReport_en_11.pdf