Source · Select Committees · Public Accounts Committee
Recommendation 26
26
Accepted
Growing grid demand and intermittent renewables require sufficient flexible generation for stability
Conclusion
Demand on the grid is likely to grow due to the increased demand for electric cars and heat pumps and a rising number of data processing centres, as well as the move to building more new homes.78 In addition, the Department also has plans to achieve a decarbonised, or clean, energy system by 2030, which might impact on the stability of the grid because of the increased reliance on intermittent renewable sources of energy, such as wind and solar power. The Department recognised that it needs to make sure that, across the grid, it has sufficient flexible generation to accommodate variations in supply from intermittent renewables which vary according to weather conditions. It also noted the need to ensure that the grid can sustain a consistent pace of operation.79
Government Response Summary
The Capacity Market (CM) is the department’s primary mechanism to ensure supply meets demand and delivers electricity security, and the department is focused on maintaining existing flexible capacity to ensure security of supply.
Government Response
Accepted
HM Government
Accepted
6. PAC conclusion: The Department has more to do to convince Parliament that it has a robust plan for ensuring security of energy supply to meet increasing demand. 6a. PAC recommendation: The Department should set out in its Treasury Minute response how it will make sure there is capacity in the grid when there is low generation from renewable energy during periods of calm weather, including from wider technologies like nuclear. 6.1 The government agrees with the Committee’s recommendation. Recommendation implemented: June 2025 6.2 The Capacity Market (CM) is the department’s primary mechanism to ensure supply meets demand and delivers electricity security. An assessment is made annually of the capacity required to meet peak demand in four years’ time and, through the CM, the majority of capacity is secured well in advance. The rest is secured one year in advance, based on the latest demand forecasts. This ensures the grid has enough capacity available to meet the statutory Reliability Standard, which is the department’s measure of adequate levels for security of supply. 6.3 The variable nature of renewables makes it critical that the grid has sufficient flexible capacity that can be ramped up quickly when renewable generation is low. The UK continues to rely on unabated gas as the main mature, reliable technology capable of providing long duration flexibility when necessary. 6.4 Other technologies like nuclear provide important baseload capacity and the department works closely with the market to understand how the capacity provided by nuclear may change as reactors come on and offline. 6.5 The department is currently focused on maintaining existing flexible capacity to ensure security of supply, and will be implementing a number of changes to the next CM auctions to: a. Support the economic case for investment in ageing plants by making it easier for plants to access three-year 'refurbishing' CM agreements. b. Introduce pathways to allow unabated gas plants to transfer from the CM to a Dispatchable Power Agreement, enabling conversion to power generation with carbon capture and storage. This aims to reduce investor concerns about plants becoming stranded assets.