A new study by the Energy and Climate Intelligence Unit (ECIU) has found that the energy generated from one wind farm would negate the need for new North Sea Gas fields, whilst heat pumps could save half the gas required by a moratorium on new North Sea licences.
Based on statistics from industry regulator the North Sea Transition Authority (NTSA), the ECIU has found that if new North Sea gas fields were halted now, the equivalent gas required come 2030 (30TWh) could be generated by one 2.7GW wind farm.
According to forecasts by the NTSA, UK gas production will be roughly 190TWh/yr by 2030, 55% below current levels. Existing gas fields could contribute 85% of this requirement, whilst only 15% would be affected by any moratorium on new licensing for gas fields – a difference easily covered by a single wind farm.
As offshore wind farms generate electricity at a much cheaper cost that gas, replacing new North Sea gas fields with a wind farm would also result in a payback of over £12 billion over the period of a 15-year Contract for Difference (CfD), based on forecasted wholesale prices, continued the ECIU.
Despite being the cheaper energy generation alternative, the renewables industry have understandably expressed concern over recent government tax changes to bolster energy investment, only applying to oil and gas.
“There is an opportunity cost in providing tax cuts to oil and gas companies in that you’re not providing those tax cuts elsewhere in the economy. Even with the windfall tax in place, the oil and gas companies are generating record-breaking profits. Meanwhile, renewable investors are warning that they plan to put their money in the US and EU thanks to tax credits on offer there, so the UK is at risk of missing out on private sector cash,” said Jess Ralston, energy analyst at the ECIU.
“With more wind farms in place, gas plants will switch on less often meaning the UK needs to find and pay for less gas and is more energy secure. Plans to accelerate offshore wind farms could balance out a moratorium.
“According to the industry itself, North Sea output will continue to decline in the coming years. Jobs will disappear whatever happens. The question for the industry and government is how best to transfer those valuable skills into a growing sector like wind away from one that’s in decline.”
Government policy prolonging investment in oil and gas would also exacerbate the UK’s dependence on gas imports by allowing newly built homes having gas boilers installed – this could add as much as 10% to gas imports in 2035, warned the ECIU.
Alternatively a new-build with a heat pump installed would use only 10% of the gas required by a gas boiler in 2030 as renewable replace most of the gas used in power generation.
If all of the 2.1 million homes that could be built by 2030 had heat pumps installed, half the amount of gas affected by a moratorium on New Sea licenses, concluded the ECIU.
These findings follow another report recently published by the ECIU which warned that slow growth in heat pump installations could cost the UK £9 billion on gas imports.