Impact of low carbon technologies on the British wholesale electricity market
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Date
29/11/2018Item status
Restricted AccessEmbargo end date
29/11/2022Author
Lupo, Zoya Sara
Metadata
Abstract
Since the late 1980s, the energy sector in Great Britain has undergone some core changes
in its functionality; beginning with the early 1990s privatisation, followed by an increased
green ambition, and commencing a transition towards a low-carbon economy. As the British
energy sector prepares itself for another major overhaul, it also puts itself at risk for not being
sufficiently prepared for the consequences this transition will have on the existing generating
capacity, security of supply, and the national electricity market.
Upon meeting existing targets, the government of the United Kingdom risks becoming complacent,
putting energy regulation to the backseat and focusing on other regulatory tasks, while
introducing cuts for thriving renewable and other low-carbon energy generating technologies.
The government has implemented a variety of directives, initiatives, and policies that have
sometimes been criticised due to their lack of clarity and potential overlap between energy and
climate change directives. The government has introduced policies that aim to provide stable
short-term solutions. However, a concrete way of resolving the energy trilemma and some of
the long-term objectives and more importantly ways of achieving them are yet to be developed.
This work builds on analysing each low-carbon technology individually by assessing its past
and current state in the British energy mix. By accounting for the changes and progress the
technology underwent in its journey towards becoming a part of the energy capacity in Great
Britain, its impact on the future wholesale electricity prices is studied.
Research covered in this thesis presents an assessment of the existing and incoming low-carbon
technologies in Great Britain and their individual and combined impact on the future of British
energy economics by studying their implications for the electricity market. The methodological
framework presented here uses a cost-minimisation merit order model to provide useful insights
for novel methods of electricity production and conventional thermal energy generation to aid
with the aftermath of potential inadequate operational and fiscal flexibility.
The thesis covers a variety of scenarios differing in renewable and thermal penetration and
examines the impact of interconnection, energy storage, and demand side management on the
British wholesale electricity prices. The implications of increasing low-carbon capacity in the
British energy mix are examined and compared to similar developments across Europe.
The analysis highlights that if the optimistic scenarios in terms of green energy installation
are followed, there is sufficient energy supply, which results in renewable resources helping to
keep the wholesale price of electricity down. However, if the desired capacity targets are not
met, the lack of available supply could result in wholesale prices going up, especially in the
case of a natural gas price increase. Although initially costly, the modernisation of the British
grid leads to a long-term decrease in wholesale electricity prices and provides a greater degree
of security of supply and flexibility for all market participants.