Electric Insights – the latest developments in electricity generation in Britain for Q3 2023

The lowest carbon quarter on record

Across the quarter, the carbon intensity of Britain’s power generation had fallen to its lowest-ever level - with emissions of only 143g/kWh. The last time this record was broken was during the COVID lockdowns of 2020, when demand for electricity reached historic lows.

The rise in renewable generation was the driving force in pushing carbon intensity down, with wind up 20% on this period in 2022. Added together, renewables supplied 40% of our electricity demand during this quarter.

The key question is whether carbon intensity will continue to fall? On the one hand, renewable capacity is accelerating. This quarter saw the first power coming on stream from the Dogger Bank offshore wind farm – the largest in the world. This will provide 6 TWh of electricity (2% of national demand) when complete. But demand for electricity is also expected to rise with the surge of electric vehicles (EVs) and heat pumps. More capacity will be required to meet this increasing need.

Solar capacity is rising at a rapid rate

The rate of solar installation has tripled over the last 12 months. 2023 is likely to see more capacity installed than in all the previous six years combined. By 2025, we’ll have seen an increase of more than 60% in the total installed capacity of solar PV in Britain.

This increase brings with it a risk. As solar output is highest on summer days and demand spikes in winter, seasonal mismatch becomes a problem. In the relatively near future, we could see a situation on the sunniest days where solar could crash wholesale power prices.

To make the most of this new capacity, we’ll need to make the power system more flexible. Otherwise, we run the risk of solar electricity being wasted, as panels export to the grid regardless of whether their power is needed or not. Interconnection with other countries and large volume and long duration storage facilities are just two of the ways we can help create this flexibility.

Could electricity demand be on the rise again after a decade of decline?

Recent trends have seen falls in electricity demand. Q3 reached a new low for this period, with demand slipping below 60 TWh.

This partly was due to mild weather during the period, with little need for air conditioning or heating. But also, because many are cutting back on electricity usage wherever they can to save money. More than 1GW of demand has disappeared over the past year. This is against a background where demand has fallen by 5 TWh per year since 2005.

Some of this disappearing demand is thanks to more energy efficient appliances. Deindustrialisation and the decline of electric heating have also played a part.

However, the reversal of this falling trend is expected as more and more organisations switch to EVs and heat pumps.

Over the next two decades, demand for electricity is expected to grow at three times the rate it rose in the 1980s and 1990s. Meeting this need will require more installation of renewable capacity, along with greater electricity flexibility.

Coal produced less than 1% of Britain’s electricity

By this time next year, the Government is committed to removing all coal generation from Britain. A decade ago, it was responsible for 40% of our power. In the latest quarter it supplied less than 1%. This is a field in which the UK leads the way. Out of the world’s 10 largest economies, only France has a lower share of coal power than Britain. However, coal is still playing a significant part in generating electricity in India and China, painting a less positive picture globally.