Solar Energy

MQT on 2017-09-14
Session date: 
September 14, 2017
Question By: 
Tony Devenish
GLA Conservatives
Asked Of: 
The Mayor


Has your Energy Team read research by Gordon Hughes, a former Professor of Economics at Edinburgh University that solar power costs now run at £22/MWh on average, implying the wholesale energy market paid £38.50/MWh for a service only worth £16.50 to it. Does the Mayor comprehend such subsidies are often paid for by some of the poorest Londoners and this may well become a bigger problem as renewables grow as a proportion of the energy mix?


Answer for Solar Energy

Answer for Solar Energy

Answered By: 
The Mayor

This research draws attention to the electricity system costs associated with variable renewable electricity like wind and solar. These system costs are created as grid system operators sometimes need to pay wind farms for example to cease or reduce production, or gas-fired power stations either to increase or decrease their output, to help balance the system and maintain the right voltage and frequency.

The overall cost of solar and other renewables is falling so quickly that even including these system costs, they offer one of the lowest cost forms of new power generation and will help reduce electricity bills. An auction for large scale renewable generation this week awarded contracts to offshore wind projects at prices as low as £57.50/MWh which falls below the cost of new gas generation, and significantly below the cost of Hinkley Point C (strike price £92.50/MWh). Analysis by Imperial College suggests that even with much higher levels of renewables on the network than today, system costs associated with wind will remain below £10/MWh. 

Dramatic falls in the cost of technologies that can provide system services like electricity storage should also make integrating higher levels of renewables increasingly economic. There is also significant scope to better control electricity demand, reducing balancing and other system costs. Most solar projects in cities like London are connected to the local distribution network and the power is used locally, reducing electricity losses and decreasing demand on the transmission network and won't therefore significantly increase transmission related costs.

My draft Environment Strategy outlines how London must work with Government to transform our energy infrastructure so that it is smarter, more effectively matching supply and demand.  At a more local level my Energy for Londoners (EfL) programme will explore how Londoners can benefit from being flexible in their electricity consumption through smart metered home energy automation, which could incorporate solar power and battery storage.

To further reduce energy bills and help make solar energy in particular a more affordable option for more Londoners we must increase the deployment rates. My draft Solar Action Plan (link below) aims to help do this by buying in bulk through a solar reverse auction, and will enable a diverse range of Londoners to benefit from solar by supporting community solar projects. We will continue to learn from projects that aim to determine how solar technologies could actually help tackle fuel poverty, such as National Energy Action's trials in three north London boroughs.