The Informer

This week’s headlines: the regulator unveils proposals to enable local energy networks to meet growing demand for power; Government is to set out a timeline to review the future of the Climate Change Agreement scheme; and moves to ensure microbusinesses get a better deal on their energy supply are announced.

  • Ofgem looks to transform local energy networks

    Ofgem has unveiled proposals to rewire Britain at a local level to create a “greener and fairer energy system” under the latest electricity distribution network price controls.

    The regulator said its ‘turn your street green’ plans will enable quick and reliable upgrades to the network to meet forecasted increases in local demand for electricity.

    The proposals for the 2023 to 2028 period also aim to unlock to investment and secure the capacity to support up to 11 million electric vehicles projected to be on the road by 2030 and increased demand for heat pumps.

    In line with the approach to the wider RIIO-2 price controls announced recently Ofgem said it would expect to see lower returns for investors to keep the costs as low as possible for consumers.

    Companies will be required to increase their capacity using flexible solutions such as battery storage instead of building new network capacity.

    The plans include a £450m strategic innovation to help drive more research and development into green energy.

    Ofgem’s Chief Executive Jonathan Brearley said: “Local electricity networks will be at the forefront of eliminating harmful carbon emissions from the country, helping tackle climate change, so it’s vital they have the investment they need to do this whilst keeping costs as low as possible for consumers.”

    David Smith, Chief Executive of Energy Networks Association, said: “Although the proposals outlined will take time to review in detail, we will continue to work with Ofgem to make sure that this vital investment can be delivered, securing economic and societal benefits now as we look to recover from the effects of the pandemic.”

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  • CCA review to get underway after extension confirmed

    The Government has confirmed plans to extend the Climate Change Agreement (CCA) scheme, which sets targets for businesses to reduce energy use in return for discounts on their energy bills.

    BEIS said it will now undertake further assessment on the longer term future of the scheme or a replacement after a consultation on the extension showed strong support from users.

    Following a consultation on the plans first announced by the Chancellor in the Spring Budget, new targets are expected to be in place from next January, allowing the extension of the scheme beyond its current March 2023 end date to March 2025. The Government said the extension would save firms £300m a year.

    Under the plans new applicants also be able to gain access to savings as of January 2021. Under the current rules, businesses have not been able to join the scheme since October 2018.

    BEIS said almost 9,000 facilities across the UK currently benefit from participation in the scheme.

    The consultation invited views on how a future CCA scheme beyond March 2025 could be targeted to better deliver value for taxpayers’ money and to support the UK’s commitment to net zero. Responses highlighted that a future reformed scheme could help industry in the transition to net zero, whilst supporting the competitiveness of businesses.

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  • Unscrupulous energy brokers in watchdog’s sights

    Ofgem has unveiled plans to tackle unscrupulous energy brokers to ensure the smallest businesses can get a better deal on their gas and electricity.

    The regulator said two out of three microbusinesses use an energy broker when choosing their current energy contract and many of them benefit from the advice of a reputable broker.

    However, an Ofgem review found that in too many cases, microbusinesses are hampered by a lack of transparency when using brokerage services and end up being locked into poor value deals because they are not fully aware of what they are signing up to.

    Ofgem found that a small number of microbusinesses were paying thousands more than they needed to in broker commission charges. Its proposals aim to make shopping around for an energy deal “simpler, quicker, and fairer.”

    Suppliers would be required ensure that brokers they work with conduct themselves “appropriately” when interacting with customers and to make commission fees and key contract details clearer.

    Philippa Pickford, Ofgem’s Director of Future Retail Markets, Consumers & Markets said: “Providing greater transparency and tackling unscrupulous brokers will help microbusinesses get a better, fairer energy deal. This is more important than ever as microbusinesses emerge from the challenges posed by the Covid-19 pandemic."

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  • Networks look at future of flexibility

    A consultation has been launched aimed at helping flexibility services play a much greater role in the future energy system.

    The Energy Network Association’s Open Networks Project is urging industry players to make their views now as it looks seeking to further drive standardisation in local energy markets across the country.

    The Open Networks flexibility consultation aims to “turbo-charge” initiatives such as demand-side response, smart charging for EVs and domestic batteries which store energy that’s generated when demand and prices are low.

    The ENA said industry viewpoints are vital and bring the energy system closer to the people it serves by identifying barriers to entry, which when overcome will enable new parties to get involved in the market of the future.

    Randolph Brazier, Head of Innovation at Energy Networks Association (ENA) which represents the UK and Ireland’s UK and Ireland’s energy networks businesses, said: “Our latest milestone in the three and a half year-long Open Networks Project, this consultation will give flexibility providers with the opportunity to feedback to the networks on the framework we’re building for them.”

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  • Wind accounted for 20% of UK power in 2019

    A strong contribution from wind generation helped renewable energy provide a record 37.1% of the UK’s electricity last year, up from 33.1% in 2018 and from under 7% in 2010.

    The Government’s latest annual report on energy generation said that 2019 was the first year in which renewables accounted for more than a third of total generation.

    Wind made up 20% of UK electricity last year, split equally between onshore and offshore wind with each generating 32 terawatt hours (TWh).

    Low carbon renewables and nuclear generation hit a record 54.4%, despite nuclear falling to 17.3% as a result of outages and maintenance. Gas generated 40.6% while coal fell to an all-time low of 2.1%.

    RenewableUK’s Deputy Chief Executive Melanie Onn said: “At a time when so many things seem uncertain, the consistent rise of renewables, keeping the UK powered up, bringing billions in investment in new energy infrastructure and creating highly skilled jobs all over the country, is a terrific success story we can all be proud of."

    “But we know that to tackle the existential threat of climate change, we need to decarbonise not just electricity, but also heating and transport, where progress has been glacial. We need innovative power sources like floating wind, wave and tidal power, renewable hydrogen and a massive expansion in battery storage to get us to net zero emissions as fast as possible – so there’s no time to rest on our laurels.”

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