Back in 2008, the CCC developed a scenario in its first advice to government. Then it estimated for the period 2008-2022 – averaging across high and low wind scenarios, ‘levelised’ or lifecycle costs of offshore and onshore wind by 2020 to be around £88/MWh and £76/MWh, respectively (expressed in 2008 prices). Interestingly, high costs and the ‘limited sunshine resource of the UK’ led the CCC to suggest that the potential for emissions reductions from solar PV was ‘very small’ within the first three budget periods. So how do the CCC’s expectations stack up against reality? Compared to the CCC’s estimate of around £88/MWh in 2020, the cost of offshore wind generation dropped to under £65/MWh in 2017. And compared to the CCC’s estimate of around £76/MWh in 2020, an independent estimate suggests new onshore wind capacity could be installed for around £46/MWh. The fall in price for offshore and onshore wind clearly exceeded the CCC’s expectations. Also exceeding expectations, UK electricity generated from solar PV has risen to 12.9TWh in 2018, and now accounts for 3.8% of total UK electricity generation (335TWh) and 11.6% of total renewable electricity generation (111.1TWh). According to an independent estimate, the cost of installing new solar PV capacity is now around £56/MWh. The ‘economic case for nuclear power deployment is strong’ and it is already ‘close to competitive’ on price with fossil fuels, said the CCC in its first report in 2008, alongside the prediction that three new generation reactors could feasibly be built by 2020 (with costs estimated at around £50/MWh). But with the industry beset with problems and delays, the latest CCC estimate of the cost of nuclear in 2020 is £98/MWh and only one out of six proposed new nuclear reactors is currently under development. Happily, the CCC’s expectation in 2008 that electricity demand would continue to increase overall (after an initial drop thanks to energy efficiency measures) has not materialised. In fact, electricity demand dropped as a result of EU standards for electrical products (though the CCC now projects a doubling by 2050 due to extensive electrification of heat and transport.
ECIU 16th July 2019 read more »