The Informer

This week’s headlines: The energy regulator is to take a more ‘adaptive‘ approach to regulation to help GB meet its net zero targets; the number of Corporate PPA deals signed by businesses rose significantly in 2019; and the UK president for the COP26 climate summit later this year has lost her role.

  • Ofgem unveils decarbonisation action plan

    New Ofgem Chief Executive Jonathan Brearley used his first day in office to launch the energy regulator’s decarbonisation action plan.

    The watchdog pledged to be “more adaptive” in its approach to regulation so it could take big decisions in a fast-changing environment.

    It said it will explore regulatory options to support the development of the offshore grid needed to enable a four-fold increase in generation by 2030. It will also come up with a strategy to allow ten million electric vehicles to be using the roads by the same date.

    The launch of the plan came ahead of an announcement by the Government that a ban on sales of new petrol and diesel vehicles will be brought forward to 2035.

    Brearley said: “It is now vital that the energy industry rises to the challenge and demonstrates how it will work with the Government and Ofgem to decarbonise Britain’s energy system at lowest cost.”

    Frank Gordon, Head of Policy at the Renewable Energy Association said the plan and the proposed changes at Ofgem are “steps in the right direction”.

    “We believe that decarbonisation must be a central mandate to the regulator and that the regulator must prioritise modernisation of the energy systems, so that they can deliver a major expansion of renewable energy generation and EV charging capacity to ensure the UK meets the 5th Carbon Budget.”

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  • Corporate clean energy contracts soar

    Businesses bought a record 19.5GW of electricity through power purchase agreements (PPAs) last year, an increase of 44% on 2018’s record figure, according to Bloomberg New Energy Finance’s (BNEF’s) latest Corporate Energy Market Outlook report.

    The United States was the largest of 23 markets covered by the report, with 2019’s total representing triple 2017’s figure.

    Google was the largest buyer of clean energy, followed by Facebook, Amazon and Microsoft.

    Last year’s total was also equivalent to more than 10% of all the renewable energy capacity added globally and represented up to $30 billion (£23 billion) of investment to develop and build the necessary projects.

    Jonas Rooze, Lead Sustainability Analyst at BNEF, said: “These buyers are reshaping power markets and the business models of energy companies around the world.”

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  • Audit office hits out at network costs

    Consumers have paid at least £800m more than was needed to maintain and improve Great Britain’s electricity network since 2013, according to a report from the National Audit Office (NAO).

    The public finance watchdog said energy regulator Ofgem had not taken into account the most up-to-date evidence on network company risk and instead allowed businesses to deliver shareholder returns of 9%, instead of the UK average of between 5% and 6%.

    The NAO also criticised the energy regulator for setting price controls for eight years instead of the standard five, which locked consumers into paying higher prices for longer.

    Akshay Kaul, Ofgem’s Director of Network Price Controls, admitted: “We acknowledge that the overall costs to consumers to date have turned out to be higher than they needed to be. That’s why our tough new round of price controls will lower returns to save consumers money, whilst pushing companies to go further on decarbonisation and ensuring we retain one of the world’s most reliable energy systems.”

    Gareth Davies, the head of the NAO, added: “While Ofgem has encouraged networks’ innovative efforts to reduce carbon emissions, more needs to be done across government if the UK is going to reach net zero emissions at least cost to consumers.”

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  • UK COP26 president loses role

    Former Energy Minister Claire O’Neill has lost her role as president of the upcoming COP26 climate change summit in Glasgow after just six months.

    In a letter to Prime Minister Boris Johnson published by the Financial Times, O'Neill attacked his record on climate change.

    She said the Government was "miles off track" in setting a positive agenda for the summit in Glasgow in November, and that promises of action "are not close to being met".

    The Government said the Prime Minister was grateful to O’Neill for her work so far preparing for the climate change summit.

    “Preparations will continue at pace for the summit and a replacement will be confirmed shortly. Going forward, this will be a ministerial role,” it added.

    Around 30,000 delegates, including 200 world leaders, are expected to attend COP26.

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  • Think tank issues net zero warning

    The Green Alliance think tank has warned that it will be impossible to reach net zero unless the UK Government takes steps to slash energy demand.

    The report – which was written in partnership with the Centre for Research into Energy Demand Solutions (CREDS), a collection of 15 universities – said energy use needs to be reduced through better designs for products and services.

    It also called for improved energy efficiency through better use of technology.

    And it said demand needs to be flexed to better match renewable energy output.

    Nick Eyre, Director of the CREDS, said: “Politicians may worry about intervening in people’s lives, but there is ample evidence to show change is supported where current patterns of consumption are wasteful of energy, and have negative social and environmental impacts.”

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