THE MARKET

The UK’s electricity system is in a state of flux.  The Government has set the challenge of ensuring that the UK’s electricity sector meets three primary objectives for the supply of clean, secure and affordable power.

The need to make electricity clean has arisen from the Government’s commitment to tackle climate change by reducing greenhouse gas emissions and investing in low-carbon energy sources, in order to meet the UN’s Kyoto Protocol and Paris Agreements, initially through the decarbonisation of electricity generation.  This has led to a significant increase in the deployment of new green technologies; particularly wind and solar which have increased by 120% over the last five years.

These green alternatives have been encouraged through generous subsidies to encourage new capacity to enter the market and at the same time disincentivising carbon intensive fuels; primary coal fired generation.

This greening of generation has led to the unintended consequence of a less secure generation mix as supplies of readily available generation from coal fired power stations are no longer available as stations have closed due to no longer being economic to operate primarily due to the increases in the tax of carbon, as coal emits twice the amount of carbon compared to gas.

The UK’s electricity generation capacity at the end of 2015 was 81GW 10% of which was from intermittent sources such that electricity is not generated when the wind doesn’t blow or the sun shines.

Accordingly, the Government is encouraging a new round of investment in generation assets to meet this gap in generation capacity through the Electricity Market Reform.  It is through this programme of investment that Forepower is engaged in.