According to International Energy Agency (IEA) website publication on Renewables 2022 Analysis and forecast to 2027 report:
New renewable capacity targets and policies improving permitting lead to a more optimistic forecast
Renewable capacity in the United Kingdom is forecast to increase nearly 70% (36 GW) over 2022-2027, almost doubling the pace of growth of the last five years. Offshore wind accounts for half of this expansion, followed by solar PV and onshore wind. Utility-scale projects lead the surge, spurred by competitive contract for difference (CfD) auctions.
In response to the energy crisis, the UK government increased its 2030 offshore wind target from 40 GW to 50 GW and established a 70-GW solar PV target for 2035 in the new British Energy Security Strategy. This year’s forecast has thus been revised upwards almost 10% to reflect recently introduced and anticipated policies.
The CfD auction conducted in 2022 resulted in the contracting of almost 7 GW of offshore wind projects, and for the first time a 32-MW project with floating foundation won a contract. Currently, the pipeline of offshore wind projects under development represents only 70% of the capacity needed to meet the United Kingdom’s 2030 target. Offshore project development can take up to 13 years, limiting the potential of new projects to be commissioned before 2030. However, the UK government plans to halve development lead times by streamlining administrative procedures. The forecast therefore assumes additional capacity from planned CfD auctions and improvements in permitting.
While the 2022 CfD auction offered an unprecedented 3.5 GW of capacity each for solar PV and onshore wind, only 2 GW of solar and 1 GW of onshore wind were awarded even though the project pipeline for each was at almost 7 GW. Many developers preferred not to participate in the auction, presumably to take advantage of high electricity prices through corporate PPAs or because they wanted to wait for equipment and material prices to fall.
Future auction rounds will be organised annually instead of every two years and will continue to include PV and onshore wind. Auctions remain the main driver of expansion, followed by corporate PPAs, which contribute 0.5-1 GW of additions annually. The government also plans to ease local permitting rules to make a larger portion of the project pipeline eligible for bidding.
For distributed PV, the government’s strategy includes introducing design standards to encourage rooftop PV installation on new buildings, increasing the availability of low-cost financing and facilitating permitting. In addition, high electricity prices are expected to make distributed PV more economically attractive. As a result, capacity growth in both the residential and commercial PV segments is expected to increase significantly in the forecast period, exceeding last year’s expectations.
In the accelerated case, UK renewable energy deployment over 2022-2027 is 27% higher than in the main case. Onshore wind has the highest upside potential if permitting and consenting rules are streamlined. Meanwhile, allocating more onshore wind and solar PV capacity in future auctions and raising price caps should attract more interest from developers and result in higher deployment of utility-scale projects. Successful implementation of plans to streamline permitting for offshore wind will also be necessary for the timely development of new projects to achieve 2030 targets.
