Informer Issue 519 - 06/07/2021

Coal will stop playing a role in meeting the UK’s power needs from October 2024 after the Government brought forward a planned ban by a year. The announcement over the use of unabated coal comes as the proportion of the fossil fuel in the energy mix has fallen to just 1.8% last year compared to around 40% ten years ago. Energy and climate change minister Anne-Marie Trevelyan confirmed the brining forward of the deadline ahead of a Powering Past Coal Alliance (PPCA) Europe meeting and said it highlighted the UK’s global leadership on climate change. A series of closure announcements have mean Uniper’s Ratcliffe-on-Soar plant is set to be the sole coal-fired power station in the UK from 2022. Trevelyan said: “Coal powered the industrial revolution 200 years ago, but now is the time for radical action to completely eliminate this dirty fuel from our energy system. “We’re sending a clear signal around the world that the UK is leading the way in consigning coal power to the history books and that we’re serious about decarbonising our power system so we can meet our ambitious, world-leading climate targets.” Read more

Britain’s electricity distribution network companies have outlined plans to spend billions of pounds to prepare for a huge rise in electric vehicles and support the net zero push. The DNOs have submitted their draft business plans to Ofgem, setting what they plan to deliver in terms of infrastructure during the next price control period – known as RIIO-2 - between 2023 and 2028. The plans include Western Power Distribution’s proposals to invest £6.2bn to deliver a “smarter, decarbonised, affordable network fit for the future”. It said the plan will create a network that is ready to deliver the power required to charge millions of electric vehicles, as well as the 600,000 heat pumps it expects across its region by 2028.
SSEN, which distributes to 3.8 million energy users in Scotland and central southern England, has also pledged £4.8bn of grid improvements by 2028 and said it plans to balance the need for smart networks with keeping bills down. The draft business plans will now be scrutinised by Ofgem. Final drafts will be submitted to Ofgem on 1 December ahead of a final decision due later in 2022. Read more

Lower than expected availability of coal and CCGT plant was a key factor in the tighter supply margins seen last winter, according to a report. The tighter margins were reflected in the fact that National Grid ESO issued six Electricity Margin Notices (EMNs) and two Capacity Market Notices (CMNs) between November 2020 and January 2021, although all margin notices were cancelled before the settlement periods they concerned. In its winter review report, National Grid ESO said although margin levels were influenced to some extent by demand and wind output, the greatest driver was thermal generation availability which did not meet expectations. Unplanned interconnector outages were also a factor. The winter saw the highest System Prices since 2001 which translated into spikes in wholesale prices. System Prices, which are used to settle imbalance volumes in the GB power market, reached a high of £4,000/MWh on 8 January. Wholesale day-ahead power prices exceeded £1,000/MWh on several occasions in January, with the market cap of £1,500MWh for the day ahead auction reached twice. The system operator said although operating conditions were complex, it “continued to operate the system securely and reliably over the winter period”. “However, as part of our standard continual improvement approach, we are using lessons learnt from last winter as an opportunity to review a number of elements regarding how we provide our Winter Outlook analysis,” it said. Read more

Power prices for small and medium enterprises (SME) are continuing to rise with further hikes possible, according to latest figures. Cornwall Insight’s latest analysis of the market found that pricing in the sector rose in the second quarter to the highest level since its records began in 2012. On average, prices have increased by around 25% year on year across a range of typical contracts and by 5.82% over the past quarter. Cornwall Insight said the rise correlates with a significant upward trend in wholesale prices which rose to some of the highest since the Beast from the East in 2018. Prices in the SME gas market have also risen, with three-quarters of suppliers analysed increasing their gas prices. However, the report said the rises in the gas market have not been as high as those seen in the power market, with price increases slowing compared to previous quarters. Looking ahead, the report said if wholesale prices continue to be buoyant or were to increase, “there is a possibility for SMEs to experience further price rises in both the gas and power markets”. Read more

Urgent decisions are needed by the Government to restore UK nuclear capacity to at least 10 GW by the early 2030s, according to a report produced by a cross-party group of MPs. The Nuclear Energy All-Party Parliamentary Group report, titled Net Zero Needs Nuclear, points out that most of UK’s nuclear fleet will retire by March 2024, with just one plant left by 2030. It says nuclear industry can support the government’s twin goals of levelling up the UK economy and cutting emissions. The report said the most critical step now is for government to begin legislating for a financing model for new nuclear in 2021. “The government should also identify and support the specific projects that can deliver new capacity. Alongside this, the industry must continue its work to reduce costs on new projects at least 30% by 2030, in line with existing commitments," the report says. The report warned that UK progress on the decarbonisation of power has stalled. "Emissions from electricity generation to date in 2021 are higher than in 2020, the first year-on-year increase since 2012. If the nuclear fleet is allowed to retire without replacement, we will fall further from our climate goals. We will lose critical skills and unique capabilities that the UK will struggle to recover, while investors and developers will lose confidence in the UK as our expertise fades,” it said. Read more