Not locked‐in? The overlooked impact of new gas‐fired generation investment on long‐term decarbonisation in the UK

This paper contrasts the potential increase in gas‐fired power generation in the UK in the period to 2020 with the ambitious decarbonisation goals set forth for this sector. An increase in Combined Cycle Gas Turbine (CCGT) capacity, in particular, only represents a threat to long‐term decarbonisation if some ‘lock‐in’ exists. It is against this background, and in the interest of challenging the perception of no significant lock‐in to gas‐fired generation, that this paper identifies investment lock‐in as phenomenon of relevance to policy‐makers. The paper determines both direct and indirect ways in which investment in significant new CCGT capacity could negatively impact on the likelihood of meeting decarbonisation goals through ‘locking‐in’ the existing technological system. It also identifies that the technical lifetime, and not just the capital repayment period, of CCGT assets is relevant in understanding the strength of the lock‐in. Finally, a regulatory structure that aligns with the long‐term targets in place is identified as providing a clear signal for investors and asset owners that may reduce the risk of ‘investment lock‐in’.