Q1 2024: Introduction

The UK is halfway to reaching Net Zero, having cut its greenhouse gas emissions by 50% since 1990. The Government proudly announced that the UK is the first major country to achieve this, but how far ahead are we, and what about the ‘hidden’ emissions that are released abroad for things we import and consume? Our first article this quarter gives a deep dive on the UK’s emissions reductions and introduces a new global decarbonisation league table.

Much of the success in reducing emissions has come from the electricity sector, which continued its progress by breaking new records for lowest carbon emissions and share of fossil fuels. Our second article looks at the falling carbon intensity of electricity as we move closer to operating a zero-carbon grid.

Wholesale electricity prices continued falling back to normal levels, averaging £65/MWh over 2024 so far. This is now just a touch above the average price during the 2010s when accounting for general inflation (£58/MWh in 2023 money). While energy costs are falling, capacity costs have risen to their highest ever. The latest Capacity Market auction, which decides the fixed payments that generators receive for being able to deliver power at peak times, cleared at £65per kW. With 43 GW of capacity contracted, the total payments due to be made in 2027/28 will amount to almost £3 billion (or £40 per person). This indicates that Britain’s power market is becoming tight and provides an incentive for old stations to remain online, and new ones to be built.

Monthly-average wholesale power prices in the day-ahead market, adjusted for inflation and in nominal terms.

Our third and fourth articles look at two new technologies which could form part of Britain’s future energy landscape. The Government announced over £20m of funding for clean hydrogen as part of its Net Zero Hydrogen Fund. Our third article looks at the seven large-scale projects this fund will enable, and the role hydrogen could play. Finally, the £2m Renewables for Subsea Power (RSP) has achieved success after 12 months of testing off Orkney. This project combines wave energy generators with under-sea energy storage to power marine equipment, and is a stepping stone towards harnessing power from the oceans to complement other renewables.