Understanding renewable energy sources

The electricity generation sector powers the UK economy, and has done so in a very similar way for a number of years. It was designed to provide electricity at the lowest cost to consumers. However this original design is no longer appropriate for the future, in which the UK will need more electricity, but must produce fewer carbon emissions doing so:

• The UK now has legally binding climate change and renewable energy targets, and this means that the way in which it produces electricity must change: power stations which produce large amounts of carbon emissions, like coal and gas, will have to gradually be replaced by those which produce very few, such as renewables and nuclear.
• In addition an increase in global demand for fossil fuels has led to these resources becoming more scarce and insecure, whilst at the same time increasing prices. The price for renewables and nuclear is also currently high.

As such the Government is examining how to reform the electricity generation market in order to provide secure, sustainable and affordable electricity.  There are a number of policy areas which it is considering:

• Carbon capture and storage (CCS);
• Nuclear;
• Large scale renewables;
• Microgeneration;
• Capacity;
• Emissions performance standards; and
• Green Investment Bank.