Phil Hewitt, director of UK energy industry analysts EnAppSys, gives insight into Energy Secretary Amber Rudd’s announcement that the Government will phase out coal fired power stations by 2025
It has been generally accepted within the market for some time now that coal will at some point be forced out of the market, either as a result of rising carbon costs or as a result of increasingly stringent emissions restrictions.
This will result in a market predominantly supplied by gas, nuclear and renewable power sources, although it should be noted that coal-fired power stations have already seen a notable decline in levels of generation within the market.
October 2015 saw levels of coal generation down 50% from their peak in October 2012, highlighting the shift already underway; with levels of generation from fossil fuel sources having fallen to 54% from 69% over the same period and down from a peak of 80% in October 2007.
This shows a market already transitioning away from fossil fuel generation:
It will however remain difficult to justify expenditure on new CCGT plants going forward, as the costs of onshore wind and solar will continue to decrease, encouraging future build out of renewables.
Within the current market, large CCGTs are struggling and even though coal stations will disappear by 2025, the costs of renewables and storage may be such that new builds of CCGT stations will be unlikely to happen without some form of significant subsidy going forwards.
