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Redpoint Energy supports UK decarbonisation agenda with major report
We have contributed to the first annual progress report to Government by the Committee on Climate Change (CCC) with a key study on the investment pathways leading towards the decarbonisation of the power sector. The CCC commissioned us to undertake a detailed analysis of the UK’s changing generation mix, and to examine the investment pathways to 2030 that will lead towards the decarbonisation of the power sector. Our report draws on the detailed modelling and analysis to assess the implications for market arrangements.
Phil Grant, director at Redpoint, describes the significance of the study: “There is widespread recognition across the industry and government that delivering a strong carbon price signal will be key in driving decarbonisation of the power sector. Yet subsidies for certain low carbon technologies, such as renewables, could depress electricity prices and deter other low carbon investment. Our study is the first to assess how investors’ expectations of future carbon prices and subsidies, and attitudes to risk, could affect the path towards decarbonisation. Our modelling approach uses dynamic simulation of the interaction between investment decisions and prices under different market conditions and energy policies. What we found was a considerable range of potential outcomes in terms of speed of decarbonisation and security of supply. Narrowing this range will likely require further interventions to strengthen the investment signals for low carbon generation.”
Grant continues: “The real challenge is to ensure that investors are making decisions based on price signals and expectations that reflect the Government’s longer-term decarbonisation goals and the social costs of different options. The demands of meeting these tough environmental targets in such a short timeframe mean that significant intervention is required. This could create uncertainties that are hard for the market to handle efficiently which is why some are calling for more fundamental change to the market structure.”