The Informer

This week’s headlines: The first Capacity Market auctions since the mechanism was reinstated saw onshore wind secure its maiden contracts; heat networks in England and Scotland win funding to accelerate their progress; the system operator looks for £203m to strengthen the transmission network; and the phase-out of UK coal is brought forward.

  • Onshore wind projects win first Capacity Market results

    Onshore wind has won its first contracts under the Capacity Market since the European Commission gave the green light for the mechanism’s reinstatement.

    In the first auction, power for delivery in the winter of 2022-23 was bought at £6.44 per kilowatt per year, a new low for a multi-year auction, with the ESO procuring 45GW of capacity from 59GW of bids, including 14.5MW from onshore wind.

    Some 14.5MW of onshore wind secured agreements in the T-3 auction. Interconnectors – which can still compete under the rules for the European Union’s internal energy market during the Brexit transition period – won contracts for 2.8GW.

    In the second T-1 auction, power for delivery next winter cleared at just £1/kW/year, with 3GW of capacity bidding for just 300MW of requirement and the ESO deciding to take 1GW, including 820MW from the Nemo interconnector linking Great Britain to Belgium.

    The next auction, for the winter of 2023-24, is due to take place on 5 March.

    Boz Bozhkov, SmartestEnergy’s Head of Markets for Smart Generation, said: “While we expect to see some price recovery, most of the conditions that led to the low T-3 clearing price are likely to persist and continue to suppress a more significant uplift in this market."

    “It will not be until all coal and older CCGT shut down that we see more attractive values in this scheme. A more ambitious governmental and corporate carbon policies may also provide some much-needed wind beneath the wings of newer, cleaner and smarter energy mix.”

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  • Heat networks in double boost

    Great Britain’s heat network sector has been given a double boost, with both the UK and Scottish governments unveiling cash for projects.

    Seven schemes in England will share £40 million from the first and second rounds of the Heat Network Investment Project, a £320m pot of money to help grow the industry from supplying 500,000 homes at present to 1.5 million by 2030.

    The UK Government has also launched a consultation on heat networks ahead of introducing dedicated legislation.

    Meanwhile, the Scottish Government has committed £50m to its Heat Networks Early Adopters Challenge Fund and guaranteed business rates relief for projects until 2032.

    Ian Calvert, Director of the Association for Decentralised Energy, said: “Significantly, these announcements signal the considerable potential that heat decarbonisation can make to reaching the net zero target.”

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  • System operator calls for £203m investment in transmission strengthening

    Connecting more offshore wind farms to the grid and allowing turbines to bid for balancing mechanism contracts has led National Grid Electricity System Operator (ESO) to recommend £203 million of upgrades to the transmission network.

    In its network options assessment (NAO), the ESO cited four reinforcements for connections between Scotland and England to allow more electricity to flow from north to south.

    Its report predicted an increase in interconnector capacity along the south coast of England in the years ahead, with the previous NAO suggesting a new transmission line should be erected between south London and the south-east coast.

    The new report added that “a new transmission route to be delivered in 2028 between Suffolk and Kent would benefit a wider range of boundaries, resulting in a higher economic benefit”.

    Julian Leslie, Head of Networks at National Grid ESO, added: “The future energy landscape is uncertain and the ESO’s recommendations make sure the GB transmission network is fit for the future.”

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  • UK coal phase-out brought forward

    Prime Minister Boris Johnson is bringing forward Great Britain’s date for phasing out coal by a year to 2024 as part of his “year of climate action” ahead of the COP24 summit in Glasgow in November.

    The Fiddlers Ferry power station in Cheshire and the Aberthaw plant in Wales are both due to close before the end of March, leaving just four coal-fired units left in Great Britain, consisting of two generators at the giant Drax complex in Yorkshire and Northamptonshire’s West Burton and Ratcliffe sites.

    Coal has gone from providing 70% of the UK’s electricity in 1990 to just 3% today, with the 2025 target having been introduced by Theresa May in 2015.

    The UK cut its greenhouse gas emissions by 2.1% year-on-year in 2018, swelling the drop since 1990 to 43% while still growing the economy by two-thirds.

    Johnson attributed the fall in coal use to the growth in renewable energy, although the recent capacity market auctions highlighted the role interconnectors are playing in meeting Great Britain’s power needs.

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  • Database of 1MW+ generators launched

    Network operators have compiled a set of system-wide resource registers (SWRRs), which contain details of all generators, storage units and flexibility providers with a capacity of more than 1MW connected to the grid.

    The companies, which worked together on the SWRRs through the Open Networks Project, said the lists would entrants to connect to the network without having to pay expensive reinforcement costs.

    The lists contain data on more than 5,000 connected assets.

    The registers will be updated each month by the network operators.

    David Smith, Chief Executive of the Energy Networks Association, said: “Harnessing the power of data, improving transparency, and harmonising processes across the country is another step forward to help us deliver the low carbon, smart grid that the public need.”

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