Drop in renewable energy production casts doubt on viability of energy transition

Today’s energy production, trade, electricity generation and consumption statistics show that primary energy consumption in the UK on a fuel input basis rose by 2.7%. 

Electricity generation by Major Power Producers was up 3.8%, with gas up 24%, nuclear up 18%, but renewables fell by 11%. Low carbon share of electricity generation by Major Power Producers fell to 56.7%, whilst fossil fuel share increased 5.3% to 42.9%. 

Sheena McGuinness, Co-Head of Energy and Natural Resources at RSM UK, said: “The decrease in renewables production was potentially impacted by the blackout in Spain last month, with officials citing too much reliance on renewable energy as a primary contributor to the outage. This highlights the vulnerability of the energy system, even in developed countries. 

“In the UK, we’re also susceptible to outages as we transition to renewable energy. It seems that government policy, lack of incentives for energy businesses, increasing supply chain costs and grid connection delays are all having an impact on the decreasing contribution of renewables to the energy mix. We’ve recently seen Orsted’s abandonment of the Hornsea 4 offshore windfarm, as a result of rising supply chain costs, which alongside energy price volatility risks, does little to provide investors with certainty when assessing the sustainability of the renewables market.”

She added: “To tackle this issue, decrease reliance on energy imports and fossil fuels, the UK needs a significant amount of renewable energy to be procured in the next energy auction, AR7, which will take place later this year. Given that offshore wind is projected to make up nearly 50% of the capacity in AR7 and AR8, it is essential that the government addresses the issues cited by Orsted in its Industrial Strategy. This will ensure that offshore wind remains a viable and competitive energy source in the UK, removing uncertainty for investors and preventing further projects form being scrapped.”