Salmon, Katrina; Grubb, Michael; (2025) Post-Contract Renewables: A Source of Cheap Low-Carbon Power? UCL Institute for Sustainable Resources: London, UK.

Preview

Text Future of Post-Contract Renewables.pdf - Submitted Version Download (1MB) | Preview

Abstract

Key Points • Alongside expanding investment, UK renewables policy needs to pay attention to the opportunities and challenges associated with older renewables coming to the end of their investment support contracts. • In theory these generators could offer an ongoing stream of cheap power based on assets for which the initial investment has been paid off, but the reality is likely to be more complex and varied between sites, technology, vintages, and regions. • The issue is urgent (with 5.5GW of renewables coming off contract in 2027) and strategically important, with another 5 GW by 2031 and rising to over 30GW cumulatively by 2037 (excluding the large Drax biomass plant; see footnote 1). • Almost half the capacity coming off contract in 2027 is in Scotland, dominated by early wind farms, with some complexities arising from transmission distances. Most of the rest is in England, divided almost equally between wind and fuelled technologies, with smaller capacities in Wales (10%) and Northern Ireland (4%). • The economics of post-contract operation for these generators are complicated by ongoing maintenance costs for ageing assets, charges for continued access to transmission (plus sometimes planning permission or land rights), and large uncertainties in the revenues that generators might earn in the wholesale market, particularly as the volume of competition from newer, supported renewables grows. • The Government is committed to offering CfDs to support full-scale ‘repowering’ of old onshore wind sites (replacement with new, usually bigger, turbines). The initial take-up will be limited by many factors, probably to a few hundred MW of existing capacity in this year’s CfD auction. The design of such auctions needs careful consideration, in particular to aid ‘price discovery’ of the actual costs of repowering old sites. • Other options include (i) enhanced use of power-purchase agreements (PPAs), perhaps with electro-intensive industries; (ii) a government-backed cap-and-floor on revenues; and (iii) varied options for ‘Green Power Pool’ arrangements to facilitate more direct consumer access to this growing renewable capacity. • All these options require further exploration, not least because they could signal and test potential pathways towards evolution of a renewables-led, asset-based power system beyond direct government investment support. Structures which enhance revenue certainty could also tempt additional renewables capacity to transfer early from their current contracts, presenting an opportunity to reduce end-consumer costs.

Download activity - last month

Export as JSONCSVXML

Download activity - last 12 months

Export as JSONXMLCSV

Downloads by country - last 12 months

Export as XMLCSVJSON

Archive Staff Only

View Item