Informer Issue 492 - 15/12/20

Renewables and new nuclear will take centre stage in the UK’s shift towards net zero, the Government’s long-awaited Energy White Paper has confirmed.

The paper sets out specific steps the Government will take over the next decade to cut emissions from industry, transport, and buildings while supporting hundreds of thousands of new green jobs.

As well as plans to double renewable generation, including through a significant increase in offshore wind which had previously been announced, the Government also said it is to enter negotiations with EDF over the construction of the Sizewell C project in Suffolk as it considers options to enable investment in at least one nuclear power station by the end of this Parliament.

The document also includes proposals for the UK’s emissions trading scheme which the Government said will be more ambitious than the EU system it replaces.

Business and Energy Secretary Alok Sharma said the White Paper represents a “decisive and permanent shift away” from dependence on fossil fuels and towards cleaner energy sources.

“Through a major programme of investment and reform, we are determined to both decarbonise our economy in the most cost-effective way, while creating new sunrise industries and revitalising our industrial heartlands that will support new green jobs for generations to come,” he said.

Emma Pinchbeck, Chief Executive at Energy UK, said the document “reveals the scale and opportunity of the energy transition”.

RenewableUK’s Head of Policy and Regulation Rebecca Williams said it provides “clear visibility on how the UK can ramp up decarbonisation across a wide range of sectors”.

“We’re pleased to see the white paper describes onshore and offshore wind as key building blocks for the future generation mix, and that it highlights the need for sustained growth in these industries to reach net zero. Innovative floating wind will also play a major role in this.”

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The total Renewables Obligation buyout fund shortfall owed by suppliers stands at £33.1m, Ofgem has confirmed.

Last month the regulator said that mutualisation had been triggered for the third year in a row with the shortfall to be redistributed across suppliers who have paid into the scheme.

A total of 33 suppliers had failed to meet their obligation by the initial deadline of 1 September.

Of the 13 suppliers who failed to comply by the 31 October late payment deadline, ten are either in administration or have had their licence revoked.

Ofgem will seek to recover outstanding payments through the organisations’ administrators where appropriate.

“Through our work on these issues, Ofgem seeks to secure the best outcomes for consumers and the wider energy market,” it said.

Ofgem redistributed the 2019-20 RO late payment fund earlier this month with a total of just under £73m paid to suppliers who presented RO certificates (ROCs) this year. Suppliers received £5.02 per ROC presented after the redistribution of the buy-out fund. From the redistribution of the late payment fund, they have received an extra £0.63 per ROC. This means that the final recycle value for 2019-20 is £5.65.

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Corporate renewable electricity sourcing in Europe is showing robust growth despite the impact of the pandemic, new figures show.

In November, the cumulative contracted volume of corporate PPAs in Europe reached 11 GW, up from just 2.2 GW by the end of 2016 and with a record 3 GW contracted in 2020 alone.

WIndEurope, which compiled the figures, said they show a growing number of companies are stepping up to the challenge of reducing carbon emissions by purchasing renewable electricity.

The figures came as US retail giant Amazon said it has added 3.4GW of new renewable power – including UK generation projects - to its portfolio taking its total capacity to 6.5 GW and meaning it has overtaken Google as the largest corporate buyer of renewables.

WindEurope said 80 new PPAs have so far been signed in 2020 in Europe compared to less than 60 in 2018.

But it said regulatory bottlenecks remain and has urged policymakers to facilitate PPAs through measures including constructing a regulatory framework fit for the future for PPAs at EU level and removing barriers at EU and national level to ensure the growth of corporate renewable energy PPAs.

Giles Dickson, WindEurope’s CEO said: “Energy-intensive industries used not to like renewables. They saw us as expensive and worried we’d mess up the energy system with our ‘intermittency’. Now they’re knocking on our doors to help them decarbonise. They see renewables are cheap and increasingly reliable. And they see that corporate PPAs help them lock in their energy costs. So we’re seeing more and more PPAs, even this year.”

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Proposals to change the way grid balancing charges are levied have been given support in principle by Ofgem.

The regulator said it will now carry out further evaluation work on the recommendations of the Second Balancing Services Charges Task Force.

The task force, established by system operator National Grid ESO at Ofgem’s request, has spent two years looking at how to better allocate grid balancing charges which are increasing amid greater decentralisation and decarbonisation of electricity production.

It has recommended that the recovery of balancing costs should be via a fixed charge on final demand rather than the current system where they are levied on suppliers and generators based on half hourly costs. The task force has said a volumetric (£/MWh) charge should be fixed over 14/15 month periods based on forecasted costs, with similar notice periods in advance of its recovery.

In its response to the report, Ofgem said the task force has “presented a good case that BSUoS should be recovered from final demand and on a flat volumetric basis”.

“However, more work is needed to quantify the costs and benefits of reform,” it added.

Ofgem also said that solutions to deliver the Task Force’s recommendations will be developed through the code modification process.

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Ventient Energy, the largest independent generator of onshore wind energy in Europe, has signed a partnership deal with SmartestEnergy to carry out sophisticated hedging for a portfolio of its UK assets.

Under the agreement, 185MW of Ventient’s UK assets will be managed via SmartFlex, SmartestEnergy’s FlexiPPA platform and include Balancing Mechanism (BM) entry for transmission and distribution connected projects.

The combined generation capacity from the sites added to the SmartFlex platform is enough to power more than 117,000 homes.

SmartestEnergy’s FlexiPPA structure will provide Ventient Energy with direct access to wholesale markets which will allow it to carry out sophisticated hedging transactions for pension fund owners on the SmartFlex Platform.

Mark Jones, CEO of Ventient Energy which has offices in Edinburgh and Luxembourg, said: “As the largest European independent generator of onshore wind energy, we’re passionate about supporting the UK’s transition to net-zero carbon by using the latest tools available to manage our assets and maximise their potential.”

Robert Groves, SmartestEnergy’s CEO, said: “At a time when balancing supply and demand is more important than ever, our digital tools and experience managing flexible capacity supports independent generators wanting to maximise their returns and participate in the future energy system.”

The agreement came just days after it was announced that one of the largest multi-academy trusts in England had switched 41 of its schools to SmartestEnergy’s renewable electricity product in a deal supported by energy consultants Zenergi.

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