The Informer

A fivefold rise is predicted in annual investment in grid-connected energy storage in the years ahead; a report argues that CfDs would give investors the confidence needed to help accelerate a low-carbon hydrogen industry; and Ovo Energy pays £1.2m after failing to hit smart meter targets.

  • Grid-connected storage set to grow rapidly

    The market for grid-connected energy storage is expected to grow significantly this year despite the disruption caused by Covid-19.

    Forecasts by researchers at IHS Markit predict that an additional 5GW of capacity will be added globally in 2020 – almost double 2019’s figure - and it now expects a fivefold rise in annual installations from 2019 to 2025, reaching 15.1GW.

    Annual grid-connected energy storage hardware revenues are also projected to more than double to £7.2bn in 2025, despite reductions in battery module prices, which are expected to fall 32% during the same timeframe.

    “The fact that the energy storage industry is proving resilient and has resumed a growth trajectory during the pandemic and subsequent economic shock proves that the 2019 market retraction was an aberration,” said Julian Jansen, research manager at IHS Markit."

    “The 2020 rebound highlights the importance of the technology and the strength of the underlying market fundamentals.”

    Jansen added: “The increasing competitiveness and critical role of battery energy storage assets in supporting the decarbonisation and resilience of the electricity system means that opportunities for energy storage continue to develop despite the turmoil caused by the Covid-19 pandemic.”

    The report said wholesale arbitrage is becoming a “major driver” for front-of-the-meter energy storage in markets including the UK and Australia.

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  • CfD-style support could unleash hydrogen potential

    A Contracts for Difference (CfD) support mechanism could help dramatically scale-up the UK’s hydrogen economy, according to a new report.

    The study, commissioned by BEIS, argues that the guaranteed revenues under a CfD mechanism would help give investors the confidence needed to back 100MW-plus projects in the sector.

    Frontier Economics’ report looks at both green hydrogen from renewables and blue hydrogen from methane reformation. It developed a longlist of business models that could potentially be used.

    “Our assessment of these business models concluded that both contractual payments to producers (e.g. contracts for difference) or regulatory returns models could be designed to deliver low carbon hydrogen production in the 2020s,” it said “We also found that including a split structure in the models (with separate compensation for fixed and variable costs) may be an effective way of managing demand risk for investors, while reducing the risk of excessive costs for taxpayers and consumers.”

    Earlier this month a report from the UK’s Hydrogen Taskforce said utilising hydrogen production could generate £18bn for the UK economy and support more than 75,000 jobs over the next 15 years.

    A separate report from Aurora Energy Research said around 500TWh of hydrogen-generated power could be consumed annually in the UK by 2050 - equivalent to 50% of national demand - provided that ambitious supports from policy and large businesses are put in place, new analysis has found.

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  • Ovo Energy pays £1.2m over meter target failure

    Ovo Energy is to pay out £1.2 million after SSE Energy Services, which it acquired in January this year, missed its target to install gas and electricity smart meters for customers in 2019.

    Under the Government’s smart metering implementation programme, suppliers are required by their licence to take all reasonable steps to rollout smart meters to all homes and small businesses by mid-2021.

    Suppliers set individual annual targets for smart meter installations and Ofgem monitors performance against these targets.

    SSE Energy Services failed to meet its smart meter installation target for 2019, before it was acquired by Ovo Energy in 2020.

    Due to the voluntary payment of £1.2 million to Ofgem’s consumer redress fund which towards supporting customers in vulnerable situations, Ofgem has decided not to take formal enforcement action.

    SSE Energy Services managing director Tony Keeling said: "Since Ovo's acquisition of SSE Energy Services, we have significantly improved our smart meter rollout programme, to ensure that we can install smart meters in more homes across the UK - a crucial part of our Plan Zero strategy and the transition to net zero," Keeling said.

    "Ovo Energy has consistently met and exceeded all of its smart meter targets, with over half of its customers currently benefiting from the technology."

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  • 2.8 million people fall behind on energy bills

    The impact of Covid-19 on household finances has seen 2.8 million people fall behind on their energy bills, according to a survey by Citizens Advice.

    In total, some 6 million people across the UK have reported falling behind on at least one household bill because of coronavirus.

    Citizens Advice fears that businesses, landlords and councils might face the prospect of being saddled with a mountain of unrecoverable debts that could affect their own viability.

    This, along with reduced consumer spending as people pay down debt, could hamper the wider economic recovery.

    The organisation is now calling for one-off or time-limited financial support for arrears built up because of coronavirus, with the cost of relief shared fairly between government, creditors, and individuals. This would be tailored to each sector but could include grants, payment matching or government-backed loans.

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  • Plans for first floating offshore wind farm in Wales move ahead

    Wales could play a key role in the development of the floating offshore wind sector after the Crown Estate granted seabed leasing rights for a project.

    If the Erebus floating wind demonstration project is granted final planning permission, it would be installed 44km from the Welsh shoreline by Blue Gem Wind whose partners are Total and Simply Blue Energy.

    The research centre Offshore Renewable Energy (ORE) Catapult has estimated that the Celtic Sea could eventually provide up to 50GW of offshore capacity.

    Hugh Kelly, the Project Managing Director of Blue Gem Wind, said: "This first project in Wales will begin to unlock the significant potential of floating wind in the Celtic Sea.

    “It is the first of the stepping-stone projects required to launch a new chapter in the development of offshore energy in the South West; a new industry that can deliver significant benefits for the local supply chain and the coastal communities of Wales and the wider UK”.

    The award of seabed rights will allow Blue Gem Wind to progress with environmental assessments and surveys, secure access to the grid and seek planning consent through the statutory processes.

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