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The evolution of the UK electricity
system in a below 2°C world
Habiba Ahut Daggash1,2,3 and Niall Mac Dowell2,3
1Grantham Institute – Climate Change and the Environment2Centre for Environmental Policy3Centre for Process Systems Engineering
UKCCSRC Cardiff Conference
April 17, 2019
Negative emissions: where and how much?
1
• IAMs estimate that the EU would need to remove 20-70 GtCO2 from the atmosphere by 2100.
• This is often exclusively provided by BECCS deployed in the power sector.
Source: Peters & Geden, Nature Climate Change 7, 619–621 (2017)
What is a ‘fair’ burden for the UK?
2
Sources: Eurostat, 2017 (for population, GDP and emissions data); Raupach, M. et al., Nature Climate Change 4, 873-879 (2014); Peters, G. et al., Environmental Research Letters 10, 105004 (2015).
14%
15%
12%
13%
Responsibility
(Historic
emissions)
Capacity
(GDP)
Inertia
(Current
emissions)
Egalitarianism
(Population)
0 20 40 60 80 100
Allocation of EU CDR burden based on sharing principles (%)
Sh
ari
ng
pri
ncip
le
BE BL
CZ DK
DE EE
IE EL
ES FR
HR IT
CY LV
LT LU
HU MT
NL AT
PL PT
RO SI
SK FI
SE UK
Modelling
3
Sources: Heuberger, C.F. et al. Comp Chem Eng 107 (2017) pp. 247-256; Heuberger, C.F. et al.
Appl. Energy 204 (2017) pp. 831–845
Meeting the UK’s Paris commitments
4
2015 2020 2030 2040 2050 2060 2070 2080 2090 2100
0
20
40
60
80
100
120
140
160
180
200
220
240
-10
Capacity Insta
lled
(G
W)
Year
Nuclear
Coal
Biomass
CCGT
OCGT
CCGT-CCS
BECCS
Onshore-Wind
Offshore-Wind
Solar
Interconnector (FR, NL)
Interconnector (IE)
Pumped-Hydro
Battery-Storage
DACS-CE
DACS-CW0
100
200
300
400
500
600
700
800
Zero-carbon system
CDR lower bound
CDR upper bound
Cum
ula
tive
syste
m cost (£
bn)
Low-carbon vs. Negative-carbon
5
1920 1950 1980 2010 2040 2070 21000
100
200
300
400
500
Ele
ctr
icity s
upply
(T
Wh/y
r)
Year
Coal*
Nuclear
Gas
Gas-CCS
Bioenergy
BECCS
Hydro
Wind
Solar
Imports
Historical generation ESO-XEL
CDR - lower bound
ESO-XELHistorical generation
1920 1950 1980 2010 2040 2070 21000
100
200
300
400
500
Year
CDR - upper bound
How can we incentivise BECCS and DACS?
Service
CO2 removalPower generation &
ancillary services Value to other emitters
Potential incentives
Negative emissions creditCarbon price equivalent
Wholesale electricity marketRevenue support e.g. CfDCapacity/ancillary services market
Auction-able credit to emitters (in power or other sectors)
BECCS
DACS
6
Current economics of BECCS and DACS
7
0 50 100 150 200 250 300 350 400
-10%
0%
10%
20%
30%
40%
50%
60%
IRR
of
FO
AK
pla
nt
Negative Emissions Credit (£/tCO2
)
DACS-CW
DACS-CE
BECCS
2040 2050 2060 2070Treasury SCC in:
2030
• A negative emissions credit (NEC) is a payment made to NETs for CO2 removal
• FOAK BECCS would need a NEC of £55/tCO2 (in addition to revenue from power generation) to achieve 4% IRR
• FOAK DACS plant would need 180-340 £/tCO2for a 4% IRR
Incentivising BECCS
8
50
75
100
125
150
175
200
0
25
50
75
100
125
150
Strike Price (£/MWh)
Ne
ga
tive E
mis
sio
ns C
redit (
£/t
CO
2)
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
BE
CC
S I
RR
IRR less
than -20%
4-15%
IRR
Can carbon pricing do it all?
9
2020 2030 2040 2050 2060 2070 2080 2090 21000
25
50
75
100
125
150
175
200
225
Capa
city In
sta
lled (
GW
)
Year
Nuclear
Coal
Biomass
CCGT
OCGT
CCGT-CCS
Onshore Wind
Offshore Wind
Solar
Interconn. (FR, NL)
Interconn. (IE)
Pumped Hydro
Battery Storage
0
100
200
300
400
BEIS CCC Treasury
Carb
on
In
tensity (
kg
CO
2/M
Wh)
Crediting negative emissions
10
2020 2040 2060 2080 21000
50
100
150
200
250
300
350
Ca
rbo
n p
rice
(£
/tC
O2)
Year
BEIS
CCC
Treasury
0
5
10
15
20
25
Cu
mu
lative
CO
2 R
em
ova
l (G
t CO
2)
• Carbon prices needed to deliver Paris target are significantly lower if BECCS and DACS are credited for CO2
removal
• Providing a NEC therefore allows for lower – and hence more politically deliverable –carbon taxation levels.
Crediting negative emissions
11
2020 2040 2060 2080 2100
0
50
100
150
200
250
Capacity Insta
lled
(G
W)
Year
Nuclear
Coal
Biomass
CCGT
OCGT
CCGT-CCS
BECCS
Onshore Wind
Offshore Wind
Solar
Interconn. (FR, NL)
Interconn. (IE)
Pumped Hydro
Battery Storage
DACCS
-500
-400
-300
-200
-100
0
100
200
300 No NEC
NEC
NEC + EPS
Carb
on Inte
nsity (
kg
CO
2/M
Wh)
Crediting negative emissions
12
2020 2040 2060 2080 2100
40
60
80
100
120
140
30
Marg
inal cost of ele
ctr
icity (
£/M
Wh)
Year
BEIS BEIS with NEC
CCC CCC with NEC
Treasury Treasury with NEC
Cumulative
until 2100
(£ bn)
No
NEC
NEC at
BEIS
Carbon
Price
Net
Cost
Total system
cost680 577 -103
Consumer
electricity
costs
497 511 +14
Carbon
taxes44 35 +9
NEC spend - 120 +120
Total cost +40
Conclusions
13
• To achieve a decarbonised electricity system, increased penetration of intermittent renewables, added flexibility and energy storage is largely sufficient.
• Deeper decarbonisation necessitates large-scale CDR deployment. This sees the system return to one dominated by thermal generators, particular BECCS and CCGT-CCS plants.
• Pursuing decentralisation in the short-term may lead to the disintegration or absence of infrastructure that appears critical in the long-term.
• BECCS and DACCS economics are unfavourable therefore they need incentives to encourage initial investment.
• Remunerating CO2 removal at the carbon price reduces the level of carbon taxation needed to deliver the Paris target, and incentivises earlier CDR deployment.
EFL Seminar
January 24, 2019
Additional Slides
Biomass supply chain
MSW Waste Wood Virgin Biomass US Pellets EU Pellets0
50
100
150
200
Raw
mate
rial (£
/tonne)
Biomass Type
Transport
Annualised CAPEX
Conversion losses
Processing and Personnel
Drying
Raw material
0
50
100
150
200
250
300
Availa
bili
ty (
TW
he/y
r)
0
1000
2000
3000
4000
5000
6000
7000
Nuclear Coal CCGT OCGT Coal-
PostCCS
CCGT-
PostCCS
Bio BECCS Wind-
Onshore
Wind-
Offshore
Solar Pumped
Hydro
Battery
Ove
rnig
ht
Cap
ex (
2015
£/k
W)
Source: IEA, 2015; DBEIS, 2016; LeighFisher, 2016; Arup, 2016; EIA, 2016; EASE-EERA, 2017; Bhave et al.,
2017; Tsiropoulos et al., 2018
UK Europe
US Rest of the World
UK (Central Value)
Technology costs
Meeting the UK’s Paris commitments
2020 2030 2040 2050 2060 2070 2080 2090 21002015
0
100
200
300
400
500
-50
Pow
er
to D
em
and (
TW
h/y
r)
Year
Nuclear
Coal
Biomass
CCGT
OCGT
CCGT-CCS
BECCS
Onshore-Wind
Offshore-Wind
Solar
Interconnector (FR, NL)
Interconnector (IE)
Pumped-Hydro
Battery-Storage
DACS-CE
DACS-CW-700
-600
-500
-400
-300
-200
-100
0
100
200
300
400
500
Zero-carbon system
CDR lower bound
CDR upper bound
Carb
on In
tensity (
kg
CO
2/M
Wh)