No long-term plan for decarbonising UK power sector risks 2035 goal, warns NAO

Under current proposals, by 2035 all electricity is expected to be generated using clean sources by phasing out gas-fired power stations in favour of wind, solar and nuclear power.

But the NAO warned that the UK’s net-zero strategy predicts a 60 per cent increase in electricity demand − due to modes of transport and heating in buildings switching to electricity from fossil fuels – which could make it more difficult to fully decarbonise.

Last month, Prime Minister Rishi Sunak split the department for Business, Energy and Industrial Strategy (BEIS) into two, which included the creation of the Energy Security and Net Zero (DESNZ) department.

The original plan was for the BEIS to draw up a clear pathway to decarbonisation by 2035 by October 2022 at the latest.

But the department was forced to focus its attention on responding to the record-high energy bills, forcing it to scale back its work on coordinating long-term power sector decarbonisation.

The lack of a delivery plan “risks diminishing the confidence of industry stakeholders”, the NAO said. The absence of a clear plan and the perception that government policies could be changed at any moment may also deter external investors from providing funds for new infrastructure, it added.

While emissions from UK power generation have decreased by 73 per cent since 1990, 41 per cent of UK electricity is still produced from natural gas, which will need to be phased out or adapted with carbon capture to achieve decarbonisation.

Greenhouse gas emissions from electricity generation made up 13 per cent of total UK emissions in 2021.

The NAO report found that ambitions to expand offshore wind, solar and nuclear power will require much faster deployment rates than have been achieved before.

To meet the goal of achieving 50GW of offshore wind by 2030, DESNZ will need to oversee the deployment of nearly three times as much offshore wind capacity in eight years as it has in the last two decades, the report said.

In its Net Zero Strategy, the government estimated that £280bn to £400bn of investment would be needed to generate the required new capacity. However, this only accounts for construction costs relating to power generation and does not include costs for all aspects of decarbonising electricity production, such as network construction or research and innovation on technologies.

Total costs will depend on multiple factors, including the location of new generation and the impact of any reforms to the electricity market.

“It is understandable that DESNZ and its predecessor BEIS has focused on dealing with the immediate energy crisis over the past 12 months,” said Gareth Davies, head of the NAO.

“But one consequence of this is that it lacks a delivery plan for decarbonising power by 2035, which is the backbone of its broader net-zero ambition.

“The longer DESNZ goes without a critical path that brings together different aspects of power decarbonisation, the higher the risk that it does not achieve its ambitions, or it does so at a greater than necessary cost to taxpayers and consumers.”