The Informer

This week’s headlines: the T-4 Capacity Market auction rebounds to a clearing price of £15.95/kW/year; a report says the UK should be generating half of its energy needs from renewables by 2030 to be on the right path to a cost-effective net zero transition; and the Chancellor is urged to unleash more low-carbon investment in tomorrow’s budget.

  • Prices rise in latest Capacity Market auction

    The latest Capacity Market auction for delivery of back-up power for the winter of 2023-24 has cleared at £15.97/kW/year, significantly higher than recent prices achieved under the mechanism.

    More than 117MW of storage was awarded contracts in the T-4 auction with just over 1GW of unproven and 165MW of proven Demand Side Response.

    Applicants including SmartestEnergy were awarded agreements under the auction which saw a total of 43.7GW procured.

    Commentators said the higher clearing price reflected an expected tightening in capacity margins due to coal plant closures.

    Last month, 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 kW/year, a new low for a multi-year auction. In the second T-1 auction, power for delivery next winter cleared at just £1/kW/year.

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  • 50% renewables target urged for UK by 2030

    The UK needs to be powered by 50% renewable energy by 2030 to be on a cost-effective path to hit net zero by 2050, according to a report.

    The National Infrastructure Commission (NIC), which advises the Government, said a renewables-dominated power system, combined with technologies including hydrogen powered generation and carbon capture and storage, could prove significantly cheaper than one which depended on a fleet of nuclear power plants.

    “A renewables-based system looks like a safer bet at present than constructing multiple new nuclear plants,” the report said.

    The report notes the cost reductions achieved in bringing renewable technologies on stream over the past ten years, while costs of building and running nuclear power stations have not fallen consistently, even in countries that have built fleets of similar designed reactors.

    Industry body RenewableUK welcomed the report with Director of Future Electricity Systems Barnaby Wharton saying it highlights the central role that low-cost wind will play in the UK's clean energy system as well as the importance of developing new technologies like renewable hydrogen, wave and tidal power. “The NIC is right to urge the government to continue with the positive progress they've made so far and to be ambitious in its vision to reach net zero emissions using a wide range of clean sources,” he said.

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  • Chancellor urged to unleash net zero investment boom

    A report by experts at the London School of Economics has called on Rishi Sunak to use his maiden budget tomorrow to trigger “massive and long-term investment” in net-zero infrastructure.

    In a new report, the economists urge the Chancellor to focus the £6.3 billion pledged during the general election for energy efficiency improvements to be focused on building upgrades.

    The paper said the £1 billion promised for electric vehicle infrastructure should be focused on areas with lower traffic and population densities.

    It added that the £800 million earmarked for carbon capture and storage (CCS) projects should be “invested carefully to ensure it leverages private capital and [is] accompanied by regional skills programmes.”

    Stern said: “by 2030 the UK could have higher living standards, and better health and wellbeing, underpinned by UK businesses innovating and adopting cutting-edge zero-carbon technologies and practices fit for the mid-21st century.”

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  • Businesses urged to cut energy use ahead of new rules

    Companies could save £6 billion a year by cutting their energy use by 20%, according to Energy Minister Kwasi Kwarteng.

    His comments came ahead of the Streamlined Energy & Carbon Reporting requirements (SECR) coming into force next month.

    Around 12,000 large and stock market-listed businesses will be required to make the disclosures, with aim to slice energy usage by one-fifth by 2030.

    Kwarteng said: “Evidence shows that reporting energy use saves businesses on their bills, can boost productivity and attract increasingly green-minded customers by showing they're committed to fighting climate change."

    “These latest requirements are coming into force in this year of climate action and will help take businesses' energy savings to the next level, cutting emissions and boosting bottom lines as we work towards net-zero by 2050.”

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  • Carbon emissions down 29% in a decade

    The UK’s carbon dioxide emissions have dropped to their lowest level since 1888, according to analysts at Carbon Brief.

    Emissions fell by 2.9% during 2019, bringing the total reduction since 2010 to 29%.

    Economic output has risen by 18% during the past decade.

    A further 29% fall in coal last year drove the fall, yet pollution from gas and oil remained largely unchanged.

    During the past decade, emissions from coal have plummeted by 80%, while pollution from gas is down 20% and oil is 6% lower.

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