Government should prioritise energy efficiency and keep investing in renewable energy and flexibility to deliver a decarbonised economy at lowest cost, the National Infrastructure Commission, an executive agency of HM Treasury, has recommended.
In a wide ranging report, the Commission urged ministers to quickly make decisions to avoid locking in higher cost outcomes.
Should government act now, the National Infrastructure Assessment suggests the UK can decarbonise power, heating and transport using low carbon and renewable sources so that consumers pay the same in real terms as today.
Commission chair, Sir John Arnett, said the UK has a “golden opportunity” to decarbonise without piling costs onto bill payers.
“Ministers can seize this chance by investing in renewables and other low-carbon technologies so they become the main players in our energy system – something that was considered a pipedream as little as a decade ago,” he said. “But they need to act now to realise the full potential of what can be achieved.”
The modelling for the report was carried out by consultants Aurora. It suggests that both high nuclear and high renewables pathways could deliver the same level of decarbonisation at comparable costs.
However, because the long life of nuclear assets could render them more expensive in the long term, particularly if renewables and battery costs continue to fall, the Commission’s report says government should rein in, at least for the medium term, the urge to fund more nuclear plants to see if those cost declines materialise.
In the meantime, a clear pipeline for auctions (contracts for difference) to help drive investment in renewable technologies should be established, said the Commission, though government should prioritise mature technologies such as solar and wind to deliver extra capacity at lowest cost.
The report emphasised that investment in flexibility was a low regrets option.
The report also echoed calls by the Committee on Climate Change to establish proper hydrogen trials, which some of the gas networks are starting to push forward. Community level trials should be in place within three years, it stated.
Establishing the right framework for charging infrastructure will be critical to decarbonising transport. While the private sector should deliver most of what is required, ministers should consider targeted support for areas where the private sector is unlikely to invest, suggests the Commission.
It said vehicle to grid services (using car batteries to balance the power system for short periods while charging), or using second life EV batteries, could also cut overall system balancing costs, by reducing the need for other forms of flexibility, such as standalone batteries.
See the report here.