The RSMR Weekly Broadcast - When will Britain be coal-free? Can renewables fill the gap?

04 May 2020

The RSMR Weekly Broadcast - When will Britain be coal-free? Can renewables fill the gap?

There's no shortage of knowledge and expertise at RSMR! Each week we get our heads together and talk about events in the world and how investments are affected by them. Our broadcast tackles a wide range of topical issues facing investors from liquidity to the future of alternatives to politics and the pound. We like to think of it as cracking content for the financial adviser. Have a read & get clued up...

 

Britain’s electricity system has not used energy provided by coal for more than three weeks now, representing the longest period without coal energy use since the Industrial Revolution. Britain ran without coal for the first time in 2016 and the longest period without coal was 18 days, back in June of last year.

There are a couple of reasons for this. A reduction in business activity during lockdown has lowered the demand for electricity and the unusually glorious weather in April has increased renewable energy with a new solar generation record of 9.68GW set on the 20th of the month. This means that the more expensive generators such as coal are not being brought forward by the system operator. The National Grid even announced that they may need to turn wind farms off in order to avoid overloading the system.

Dr Iain Staffell is a lecturer in Sustainable Energy Systems at the Imperial College, London. Dr Staffell and his team produce ‘Drax’ Electric Insights’ which looks closely at the supply, demand, price and environmental impact of Britain’s electricity. He comments that ‘until just a few years ago, Britain produced more electricity from coal than from any other fuel, now it is able to go for several weeks at a time without a single plant turning on. This has not had negative impacts on the security of supply or on consumer prices, so it is a lesson for other countries that are lagging behind on decarbonisation’.

Burning coal to make electricity has become unprofitable and socially illogical, allowing renewable energy and natural gas to come to the fore. The UK was set to leave coal behind by 2025 and Germany was aiming to quit coal by 2038, but the coronavirus pandemic is accelerating this process.

The International Energy Agency published a report gauging the impact of the coronavirus on energy and they predicted that coal demand will fall by 8%. China is the biggest consumer of coal, but demand is expected to fall by 5%, despite industries being back in production since their lockdown was lifted back in March. In the past two weeks, Austria and Sweden have shut their last coal-fired power plants and they join a growing number of countries that no longer use coal to produce electricity.  

With 2020 expected to be a record year for renewables, the shift away from fossil fuels comes as no surprise, but the move to renewables is gaining serious momentum. The International Energy Agency have predicted that demand for coal in Europe will slump by 20% and by 25% in the US.

With the transition to renewables no longer requiring expensive government intervention, consumers and businesses can now choose to have a 100% renewable energy contract. Using energy generated from natural, replenishable resources helps to reduce the production of greenhouse gases, decreases our dependency on non-renewable energy and can also lower our energy bills. Such a positive shift is great news for the environment and for us all.   

 

QUIZ QUESTION: What is the UK's strongest source of renewable energy?

LAST WEEK'S ANSWER: In June 2008 the highest inflation-adjusted monthly average crude oil price was 148.93 dollars per barrel

 

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