The Informer

This week’s headlines: using surplus renewable generation to produce hydrogen could significantly boost renewable generators’ revenues in the decades ahead; Ofgem is easing the burden of the increased costs of balancing the system during Covid-19; and wind helps the UK break another renewables record in the first quarter of the year.

  • Renewable generators could benefit from £3bn hydrogen boost

    Hydrogen could meet up to half of GB’s energy needs by 2050 and deliver a £3bn annual boost to revenues for renewable generators, according to a new report.

    Blue hydrogen produced from natural gas and green hydrogen, produced via electrolysis using renewable power, can meet 45% of GB’s final energy demand by 2050 said the research by Aurora Energy Research.

    Green hydrogen production can also create demand for surplus renewable generation during periods when wind and solar production is high.

    Widescale hydrogen adoption for energy system decarbonisation would lessen the burden on the power system during periods of peak demand in sectors such as heating and transport, reducing the requirement for flexibility in the power system.

    The country’s gas networks could also be adapted to use hydrogen, enabling mass conversion of boilers to provide heat and hot water.

    “The rollout of hydrogen could accelerate green growth and enable the development of globally competitive low-carbon industrial clusters while utilising UK’s competitive advantage on carbon capture,” said Aurora.

    A major report by the Committee on Climate Change, which advises the UK Government, last week said low-carbon hydrogen is “critical to achieving Net Zero and needs to be deployed at scale during the 2020s.”

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  • Balancing charges to be capped

    Ofgem is capping payments due for balancing services to help businesses and generators cope with increased costs during the Covid-19 pandemic.

    The regulator said that reduced demand since the start of the lockdown has led to increases in the cost of balancing the electricity transmission system.

    “We recognise that the Covid pandemic has resulted in demand reductions that even prudent market participants may not have foreseen, or incorporated into all of their commercial decisions for summer 2020,” it said.

    It has now decided to cap Balancing Services Use of System (BSUoS) charges which are used to recover the costs of balancing.

    The BSUoS price will be capped at £15/MWh in each settlement period until 31 August. Any under-recovery of revenue will be recovered through BSUoS charges equally across all settlement periods in 2021-22.

    Ofgem said it expects the deferred payments will be less than 5 per cent of total BSUoS charges from 25 June-31 August.

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  • Almost half of UK’s Q1 power generated by renewables

    Increased output from wind farms saw renewables account for a record 47% of the UK’s total generation in the first quarter of 2020.

    The share increased from 35.9% in the first three months of 2019, according to statistics by the Department for Business, Energy and Industrial Strategy (BEIS) show.

    Renewable sites produced 40.8 TWh of electricity, up 29.8% in annual terms on the back of capacity additions, higher average wind speeds and increased rainfall volumes.

    Output from offshore wind farms rose by 53% compared with the previous year, while onshore wind generation grew by a fifth.

    In total, wind generated 30% of the UK’s electricity in the first quarter, beating the previous record of 22.3%.

    Overall, low carbon electricity which also includes nuclear power, made up a record 62% of the generation mix, up from 52% for the same period the previous year, the figures show.

    Coal’s share edged up from 3.5% to 3.8%, as stocks at Fiddlers Ferry power plant were used up before closing, while gas fell from 42% to 31%.

    Industry body RenewableUK’s head of policy and regulation Rebecca Williams said: “At the coldest time of year, wind and renewables rewrote the record books right across the board, keeping our nation powered up when we need it most.

    “This is the clean energy transition written very large indeed,” she said.

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  • Funding launched to help businesses cut emissions

    Energy Minister Kwasi Kwarteng has announced nearly £80 million of government investment to help cut carbon emissions from energy intensive businesses and homes.

    The funding will be invested in a wide range of programmes, including pioneering heat networks and an innovative new programme to bring down the cost of retrofitting residential properties with the latest energy efficiency technologies.

    The package includes £30 million towards the first phase of the Industrial Energy Transformation Fund (IETF), which supports energy intensive manufacturers, like car factories and steel plants, to cut their carbon footprint. The fund allows companies with high energy use to apply for grants to install technology that reduces their energy bills and cuts carbon emissions.

    Worth an eventual £289m in England, Wales and Northern Ireland up until 2024, the IETF also seeks to help bring down the costs of technologies that reduce energy consumption and emissions in heavy industrial processes.

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  • New checks on energy suppliers on way

    New requirements are set to be introduced for energy suppliers later this year in a bid to drive up customer service standards.

    Under its final proposals announced by Ofgem in a statutory consultation, the regulator said growing suppliers may be stopped from taking more customers on if there are concerns over their ability to serve them.

    The regulator also plans to introduce new licence requirements in the event of supplier failure to minimise the cost and disruption to the wider market.

    Suppliers would also be required to have plans in place to minimise the costs which are mutualised across other suppliers in the event that they fail.

    Mary Starks, Ofgem’s Executive Director of Consumers and Markets, said: “Energy suppliers have been at the core of the industry response to the Covid-19 protecting customers and the energy supply of those most in need."

    “Now more than ever we need to ensure that suppliers are set up in the right way to treat customers fairly and meet the challenges of today’s energy system.”

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