The Informer

This week’s headlines: a review group has said the investment proposals of network companies can’t be justified; over £1bn has been paid out following the reinstatement of the Capacity Market; a report warns that offices are wasting millions on energy; and a major bank has pledged to halve the carbon emissions it finances.

  • Network firms challenged over costs

    The increase in costs that network companies are looking for under the next price control period can’t be justified, according to an independent review group set up by Ofgem.

    The challenge group, made up of representatives from organisations including Citizens Advice, also said that none of the companies - apart from National Grid Electricity System Operator (ESO) - has been genuinely proactive in shaping the path to net zero.

    After taking out variable network demand expenditure, companies are asking for an additional £4 billion of spend for the next price control from April 2023 compared to the previous period.

    Ofgem has said it is planning to lower returns for network operators for the next price control and said the challenge group’s report will help support its work to come to a final decision on the revenues required by the network companies.

    The challenge group said that: “Given the huge transformation that will be required in energy networks to implement the energy transition we are disappointed that no company, apart from the ESO, has been genuinely proactive in shaping the path to net zero.”

    Ofgem will be consulting on its detailed methodology for the price control in the summer.

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  • Deferred Capacity Market payments top £1bn

    The Electricity Settlements Company (ESC) has handed over more than £1 billion to providers following the reinstatement of the Capacity Market.

    The European Commission gave the green light in October for the market to continue following a state aid investigation.

    The mechanism had been suspended in 2018 after the European Court of Justice ruled the commission had not followed the correct procedure when awarding state aid approval in 2014.

    ESC Chief Executive Neil McDermott said it was “very heartening that we have been able to issue standstill payments in full and on time, boosting investor confidence in the capacity market” adding that 99% of invoiced funds had been collected with 15 days.

    He added that the ESC will take debt recovery action against a small number of suppliers that haven’t paid the full amount they owe.

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  • Office owners urged to tackle energy waste

    Businesses across five major UK cities are spending £60 million on wasted energy, which could be used to power more than 100,000 homes, according to a report from the Green Alliance think-tank.

    London was the worst offender, accounting for £35m of wasted energy, followed by Manchester, Bristol, Leeds and Birmingham.

    Caterina Brandmayr, Senior Policy Analyst at Green Alliance, said: “It’s hard to see why dealing with this problem isn’t yet a priority for companies in terms of cost savings or for the government in reaching its carbon targets.”

    The think-tank pointed to solutions including artificial intelligence (AI) energy-optimisation systems, which could cut energy use by as much as 14% in commercial buildings and deliver pay back on their investment costs in just a few months.

    It also pointed to examples from other countries, including Australia, where the National Australian Built Environment Rating System has brought down energy use across the country’s offices by nearly 40% over the past 13 years.

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  • Business leaders increasingly see benefits of sustainability focus

    Responding to the climate emergency through pledges and initiatives will enhance companies’ reputations, according to accountancy firm PwC’s annual survey of chief executives.

    Three-quarters of bosses think that taking steps to tackle climate change will boost their companies’ standing, while 51% believe responding to global warming will allow them to create products and services.

    One-quarter are “extremely concerned” about climate change, while 64% feel it is a threat to their organisation.

    The results of this year’s survey came as the Carbon Disclosure Project (CDP) added car maker Ford, electronics firm LG and drinks giant Pernod Ricard to its list of companies best prepared for the effects of climate change.

    Meanwhile, the latest report from GlobalData found that sustainability will be the most important theme discussed in corporate boardrooms worldwide, with Head of Thematic Research Cyrus Mewawalla adding: “Each new climate-related emergency, human rights violation, or corruption scandal reinforces the public opinion that companies must become more sustainable.”

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  • Lloyds pledges to halve carbon emissions it finances

    Lloyds Banking Group has promised to reduce the carbon dioxide emissions it finances by 50% before the end of 2030.

    The bank said the pledge was equal to axing the carbon emissions from 250,000 homes.

    Chief Executive António Horta-Osório said: “The next decade will be crucial for protecting the planet for future generations, and financial services has a critical role to play.”

    The group also unveiled a partnership with The Woodland Trust to plant ten million trees over the next ten years.

    The bank trumpeted its existing work, including financing £2.8 billion of green bonds to UK companies, which it said was more than any other bank.

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