Informer Issue 498 - 02/02/2021

Strong growth in corporate renewable energy purchasing last year highlights how high sustainability now is on the business agenda, according to a new report.

Latest figures from BloombergNEF (BNEF) showed a record 23.7GW of clean energy was purchased by corporates in 2020, up 18% from 20.1GW in 2019, and from 13.6GW in 2018.

Amazon was the leading buyer, with 35 PPAs signed in 2020, including a deal for the 129MW Kennoxhead wind farm in South Lanarkshire, Scotland. The online retailer has now purchased over 7.5GW of clean energy to date, seeing it overtake Google (6.6GW) and Facebook (5.9GW) as the world’s largest clean energy buyer.

The US remained the largest market for deals although the number there fell for the first time since 2016. However, in Europe, the Middle East and Africa, PPAs tripled to a record 7.2GW. BNEF said the flow of new companies making clean energy commitments is an indicator of how much more the market can grow. It pointed out that some 65 new companies signed up to the RE100 campaign in 2020, pledging to offset 100% of their electricity consumption with clean energy. BNEF forecasts that the 285 RE100 members will collectively need to purchase an additional 269TWh of clean electricity in 2030 to meet their goals which could catalyse an estimated 93GW of new solar and wind build.

Kyle Harrison, BNEF Senior Associate said: “Corporations faced a wave of adversity in 2020 – internal corporate functions were disrupted on the outset of the pandemic, and many companies saw revenues plummet as global economies buckled. To not only maintain, but grow, the clean energy procurement market under these conditions is a testament to how high sustainability is on many corporations’ agendas.”

Harrison added that investor interest in sustainability is “sky high”, with inflows to sustainability-focused funds growing 300% between 2019 and 2020.

“Companies in all sectors, including hard-to-abate ones like oil & gas and mining, are feeling the pressure to purchase clean energy and decarbonise,” he said.

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A renewable industry body has called for embedded generators to be compensated if they are disconnected from the network through no fault of their own.

In its response to a consultation by system operator National Grid ESO on the ‘Last Resort Disconnection of Embedded Generation’, the Association for Renewable Energy and Clean Technology (REA) also said fossil fuel generation should be switched off before renewables.

The proposed modification seeks to clarify the arrangements for emergency instructions that the ESO can issue to Distribution Network Operators (DNOs) to disconnect embedded generators, as a last resort in an emergency situation and after having exhausted all other commercially available options.

National Grid ESO said the modification is needed to replace the temporary solution which was implemented due to the unprecedented societal changes brought about by the COVID-19 pandemic, increasing the need for the ESO to have access to an unambiguous last resort action to use in an emergency.

Frank Gordon, Head of Policy at the REA, said: “Though we appreciate that the arrangements being brought in under this modification are proposed to be last resort only, we believe that some form of compensation should be provided to embedded generators in the event that they are disconnected through no fault of their own."

“Given our Net Zero commitments, instructions should also be issued to the effect that fossil fuel generation should be switched off before renewables are and particular care must be taken for types of generation with possible safety implications from being switched off, such as landfill gas sites.”

The consultation closes on 1 March.

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The impact of Covid-19 disruption has seen the Hinkley Point C nuclear plant delayed further and the expected cost revised upwards by £500m.

In an update from EDF Energy, the French company confirmed the pandemic had affected work schedules at the site in Somerset.

Although it said it made significant progress in 2020 on site, in the design execution plans and on the manufacturing of equipment, it expects the start of generation to be delayed by six months to June 2026. In 2016 a target date of the end of 2025 had been pencilled in.

The additional cost now puts the estimate at between £22bn-£23bn.

The original plans for the site were for it have started generating in 2017 and cost £18bn.

Last month the Centre for Policy Studies (CPS) warned that the UK Government must continue to support nuclear power if the country is to meet an expected doubling of electricity demand by 2050 while achieving its net zero ambitions.

The UK will have retired 14 of its 15 currently operating nuclear reactors by 2030, equivalent to a loss of 7.7 GW of generating capacity. The construction of Hinkley Point C will replace some of the shortfall but the report warned "there is a risk that without more capacity, the UK will have to prolong its dependence on fossil fuels - which would exacerbate climate change."

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Two energy companies which supply more than 400,000 homes and businesses have ceased trading with regulator Ofgem appointing new suppliers to take on their customers.

EDF will take on Green Network Energy’s 360,000 domestic customers and a small number of business customers and British Gas’s Evolve arm will now be responsible for Simplicity Energy 50,000 domestic customers.

The two companies are the first small suppliers to fail in 2021 following a flurry of collapses in the second half of 2020.

Sarah Broomfield at Uswitch.com said challenger brands have faced a difficult year.

“They’ve been hit hard by the knock-on effects from the pandemic and many operate on thin profit margins,” she said.

Meanwhile Ofgem has said it proposes to fine Symbio Energy £100,000 for making four late payments into Government renewables schemes, including Feed-in Tariff (FIT) payments and the Renewables Obligation (RO) scheme.

Ofgem said while it acknowledges the financial impact of the Covid-19 pandemic on suppliers, it said other suppliers have gone to “considerable lengths to pay on time”.

“It is the supplier’s responsibility to be aware of its upcoming liabilities and to ensure it is in a position to meet them.”

Symbio Energy has since made all payments, which totalled around £1.2 million.

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The oil and gas industry plans to increase spending on renewables this year as it looks to accelerate its shift to a lower carbon future, according to a report.

More than half (57%) of industry leaders surveyed by consultancy DNV GL for its annual outlook report said they plan to raise investment in renewables, up from 44% last year.

Only one in five (21%) say they will increase spending on oil projects in 2021, as the industry “increasingly comes to terms with the notion that the world’s demand for oil has peaked or will peak in the short to medium term”, said DNV GL.

Remi Eriksen, CEO, said net zero policies being established around the world were changing are “changing the direction of the oil and gas industry”.

He added: “The financial markets – through the effects of the Covid-19 pandemic – have seen what peak oil demand could look like, and are increasingly factoring in changing sentiment in society towards a decarbonised future. Decarbonisation has moved from something on the horizon to an immediate priority, and there are signs that our sector may invest to transform rather than cut its way out of the present crisis.”

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