5. Electricity supply
How we monitor electricity supply
The Net Zero transition for the electricity supply sector requires technological transitions to reduce emissions from electricity generation, while at the same time meeting increasing demand as the economy electrifies. In the long term, reductions in the emissions-intensity of generation will deliver the majority of emission savings, with offshore wind forming the backbone of the future system. However, demand-side actions have an important supporting role, particularly in enabling the flexibility required to balance a system based on weather-variable renewables.
The monitoring map for electricity supply (Figure 5.1) shows how the Net Zero transition could be achieved and the Government’s Energy Security Strategy (ESS) delivered.
- Reducing emissions-intensity of electricity generation. This will require an expansion of low-carbon generation (e.g. renewables and nuclear), alongside new, flexible and schedulable sources of low-carbon capacity (e.g. gas with carbon capture and storage (CCS), hydrogen) to replace the role currently played by unabated gas-fired plants in balancing the system.
- Low-carbon capacity. The Government has ambitious deployment targets for offshore wind and nuclear. Contracts for Difference (CfDs) have proved successful at delivering low-cost renewables over the last decade. A Regulated Asset Base (RAB) model is proposed for new nuclear projects.
- Flexible, schedulable low-carbon capacity. Markets for gas CCS and hydrogen need to be developed over the coming decade, and then commercialised at scale. The Government is considering mechanisms for this, but progress will also rely on developing the wider infrastructure requirements (e.g. transport and storage of CO2, production and storage of hydrogen).
- Unabated gas. Fully decarbonising electricity generation by 2035 will require the phase-out of the use of unabated gas. The Government needs to set out a strategy for how this will be delivered.
- Demand flexibility can help manage the variability of a renewables-based system, and in future could be provided by electric vehicle charging, heat pumps, and production of hydrogen from surplus electricity generation. For domestic consumers to benefit from this will require widespread uptake of smart meters and smart tariffs. The design of electricity markets will need to reflect the new possibilities for hydrogen production business models.
Underpinning all these changes will be the need to ensure electricity networks are sufficiently developed in time to accommodate future increases in demand and generation.
Figure 5.1 Monitoring map for electricity supply
Source: CCC analysis
This section sets out the indicators we will use in our progress monitoring for the sector. For each indicator we assign an ID number and identify a current data source. We explain why each indicator is important and what we are looking to see in our monitoring. The historical data and, where available and relevant, the benchmark trajectories against which we compare them are presented in the supporting data alongside our Progress Reports. We discuss policy needs (flagged as ‘Policy’) alongside the most relevant outcomes and enablers. Specific recommendations are made in our annual progress reports to Parliament.
Required outcome: Increased capacity
This group of indicators tracks progress on the development and deployment of offshore wind, onshore wind, and solar capacity.
- Under our Balanced Pathway, renewables contribute 70% of electricity generated in 2035, with offshore wind forming the backbone of the system.
- Renewable energy projects have a multi-year development process, so in addition to installed capacity these indicators also track the pipeline of capacity under construction and in consenting.
Indicators: Operational capacity
ID: ES1, ES2, ES3
Source: DESNZ Energy Trends: UK renewables – Table 6.1. Renewable electricity capacity and generation
- These indicators measure the operational capacity of offshore wind, onshore wind, and solar.
- As part of the ESS, the Government set an ambition for up to 50 GW of offshore wind capacity by 2030 and a five-fold increase in solar (to 70 GW) by 2035. The indicators reflect these ambitions. Onshore wind capacity is tracked against the CCC Balanced Pathway.
- Policy. A large part of renewables capacity is delivered through centralised Contract for Difference (CfD) auctions initiated by DESNZ. The Government has committed to annual auctions, and these should be linked to the pathways required to deliver their ambitions for installed capacity.
Indicators: Annual capacity entering construction
ID: ES4, ES5, ES6
Source: DESNZ Renewable Energy Planning Database (REPD); The Crown Estate Guide to Offshore Wind Leasing Round 4
- These indicators monitor the annual capacity of offshore wind, onshore wind, and solar entering construction, tracked against a level consistent with the required deployment trajectory.
- The trajectories are based on the required capacity entering operation and the average construction duration for each technology.
- Policy. The Government should identify and address potential supply-chain bottlenecks, to ensure construction does not become a barrier to deployment.
Indicators: Annual capacity entering consenting
ID: ES7, ES8, ES9
Source: DESNZ Renewable Energy Planning Database (REPD); National Infrastructure Planning project directory; and developer websites
- These indicators track the annual capacity of offshore wind, onshore wind, and solar that enters consenting (i.e. submits a planning application to the relevant local or national authority) against a level consistent with the required deployment trajectory.
- The trajectories are based on the required capacity entering construction, the average duration between entering consenting and entering construction, the average drop-out rate, and the impact of Government policy as expressed in the ESS.
- Policy. A smoothly functioning planning and consenting process is required to support renewables deployment. Government should identify and address any barriers which could cause bottlenecks and delays in approving new projects., and should create a Minister-led infrastructure delivery group, advised by the new Electricity Networks Commissioner, to ensure enabling initiatives for energy infrastructure build are taken forward at pace and necessary policy changes are implemented across the UK
Low-carbon flexibility indicators
Required outcomes: Develop flexible low-carbon options and phase out use of unabated fossil fuel
This group of indicators tracks progress on the development and deployment of low-carbon flexibility.
- The UK Government has committed to decarbonise electricity supply by 2035, in line with the Climate Change Committee’s advice.
- Given the relative inflexibility of variable renewables and nuclear generation, low-carbon flexibility is essential to balance the electricity system in both the short-term (e.g. seconds, minutes, hours) and the long-term (e.g. days and weeks) and reduce the dependence on unabated gas.
- Flexibility can be provided by a range of sources including back-up generation from dispatchable low-carbon technologies, by storing energy and using it when demand is higher and by managing demand.
- In addition to the full delivery of its existing renewables and nuclear commitments, the UK Government must give equal focus to developing a portfolio of low-carbon flexible solutions.
- The trajectories for these indicators were developed through modelling commissioned for our Delivering a reliable decarbonised power system report published in 2023. The report illustrates what a reliable, resilient, decarbonised electricity supply system could look like in 2035, and the steps required to achieve it.
Indicator: Unabated gas share of generation
Source: DESNZ Energy Trends: UK electricity: Fuel used in electricity generation and electricity supplied; BEIS Historical electricity data: Historical electricity data: 1920 to 2021; BEIS Digest of UK Energy Statistics (DUKES): renewable sources of energy: Capacity of, generation from renewable sources
- This indicator tracks the share of electricity generation from unabated gas against a level consistent with the required trajectory to decarbonise electricity generation.
Indicators: Dispatchable low-carbon capacity
ID: ES11, ES12, ES13
- These indicators track the capacity of dispatchable low-carbon generation technologies in operation, under construction and in development against a level consistent with the required development trajectory.
- The term low-carbon dispatchable capacity encompasses gas CCS plants and hydrogen turbines.
Indicators: Grid storage
ID: ES14, ES15
Unit: GW, GWh
- These indicators measure the output capacity (GW) and stored capacity (GWh) of grid storage against a level consistent with the required trajectory.
- This indicator comprises any storage technologies connected to the grid (e.g. batteries, pumped storage, compressed air energy storage and liquid air energy storage).
Indicator: Active demand response as a share of total demand
- This indicator tracks the fraction of domestic demand (excluding losses) that is shifted or avoided as a share of total demand against a level consistent with the required trajectory.
Required outcomes: Utilise flexible demand
This group of indicators tracks progress on the enablers that will ensure that the benefits of low-carbon flexibility are delivered.
Indicator: Smart meter uptake
Source: DESNZ Smart meters in Great Britain, quarterly update
- This indicator tracks the roll-out of smart meters, which are a critical enabler for delivery of a decarbonised power system by 2035 as they are needed to measure the use of electricity on a half-hourly basis and reward flexibility.
- The Government has set out a firm commitment and policy framework to drive a market-wide roll-out of smart meters by 2025.
There are some areas which lack granular or regular data. We intend to add the following areas to our electricity supply framework where possible in the future:
- Floating offshore wind. The offshore wind indicators do not distinguish between fixed and floating offshore wind. Floating platforms are expected to become an increasingly important part of the fleet mix, and the ESS has an ambition for up to 5 GW by 2030. In future data should be collected which distinguishes between floating and fixed-bottom offshore wind.
- Small-scale solar. The DESNZ Renewable Energy Planning Database, and consequently the pipeline and the average development stage durations and drop-out rates, only considers developments with capacity greater than 150 kW. This will have a particular influence for solar, where currently around one-third of operational capacity is from small-scale installations with capacity less than 50 kW.
- Demand flexibility. A full picture of the extent to which peaks in demand for electricity are reduced by flexibility (time-shifting of demand or reduction) is difficult to determine at present, although some evidence can be gained from participation of the demand-side in ancillary service markets. New metrics should be developed to show what proportion of demand is behaving flexibly.
- Network capacity. Utilisation of new sources of low-carbon electricity and facilitation of growing demand for electricity will depend on the development of sufficient network capacity. At a transmission level, developments are reported in the Electricity Ten Year Statement. At a distribution level, we will look towards improved reporting within the new network price control regulatory period (RIIO-ED2).