GlobalData's project manager Mohit Prasad believes the UK's "Big Six" energy utilities will follow E.ON towards renewables despite a recent proclivity for gas-fired facilities
The move by E.ON to switch to 100% renewables could have a major impact on the UK’s “Big Six” power suppliers, according to GlobalData.
The market intelligence firm said the average cost of a coal-fired plant in the UK, which is aiming to phase out all use of the fossil fuel by 2025, was $2,811.1 per kW at the end of 2018.
However, gas-fired plants had a project cost of $1,191.7 per kW during the same period, compared with onshore wind and solar’s $1,999 and $1,559 per kW, respectively.
“The Big Six [British Gas, EDF Energy, E.ON SE, npower, Scottish Power and SSE] hold more than 70% of the domestic supply market and have already started re-aligning their generation fleet by making announcements on the planned closure of their coal-fired plants,” said Mohit Prasad, project manager at GlobalData.
“For example, SSE will be closing its last remaining coal-fired plant by March 2020 and EDF Energy is planning to close its coal-fired plant by September 2019.
“Furthermore, companies including Scottish Power and SSE have been making investments in offshore wind in order to have more renewable energy in their portfolio.”
Big six shift to renewables
In 2017, the UK experienced a dip in clean energy investment as a result of various government policies that ranged from removing subsidies for solar project to taxing all forms of renewables, engineering a bias for gas-powered plants.
However, the recently-introduced Contracts for Difference (CfD) initiative, designed and implemented by the country’s government to promote and facilitate the use of green energy, have started to tilt the scales in favour of renewables.
Mr Prasad added: “The average project cost of renewable energy is declining due to the advancements in technology, reductions in the cost of producing components and the scale of production.
“According to GlobalData, the average project cost of solar photovoltaic installations declined sharply from $6,678 per kW to US$1,560 per kW between 2010 and 2018.
“During the same period, the cost of onshore wind declined from $2,200 per kW to$1,999 per kW.
“With the average cost of solar photovoltaic installations expected to decline further, the power generated through such systems will be cheaper, which will ultimately impact the electricity bills of households and commercial installations.”