Informer Issue 520 - 13/07/2021

BEIS has announced its targets for the next Capacity Market auctions to provide back-up power between 2022-26. Target for both the T-4 and T-1 auctions to be staged in February are higher than the figures for the latest auctions held earlier this year. The total capacity sought under the T-4 2025/26 auction will be 44.1GW, with 2GW of this set aside for the associated T-1 auction, leaving a target of 42.1GW. That compares to the 40.1GW targeted in the last T-4 auction which cleared at £18/kW/y. For the T-1 2022/23 auction, BEIS is targeting 4.5GW, higher that the 2.4GW target for the previous auction. The targets for the auctions were confirmed in a letter from BEIS to the system operator and follow National Grid ESO’s Electricity Capacity Report 2021 and advice from BEIS’s Panel of Technical Experts. In its letter, BEIS said the parameters may be adjusted during the autumn, taking into account results from auction prequalification and the related appeals process. Gas projects accounted for almost two-thirds of capacity under contracts awarded under the latest T-4 Capacity Market auction held earlier this year. Around 40GW of de-rated capacity was procured, including 1.7GW of new build generation. Demand-side response secured 28% of contracts. The latest T-1 year-ahead auction had cleared at a record high price of £45/kW/year with batteries, demand-side response, and gas projects securing the lion’s share of contracts. Read more

Offshore windfarm operators should pay compensation to communities impacted by new transmission infrastructure, according to a new report. The Policy Exchange think tank warns that the scale of new wind farms now planned in the UK means that there is increasing local concern over the number of new grid connections required to connect offshore wind farms to the onshore electricity network. “Without more coordination between projects, the impact of this new infrastructure on local communities and the environment risks similar local backlash to onshore wind farms and fracking,” it argues. It calls for policies to enhance coordination between projects, which would reduce the amount of infrastructure required onshore. The report also proposes compensation for affected communities in the form of ‘Offshore Wind Wealth Funds’. Meanwhile, the Government has welcomed news of more than £180m of private investment to support new UK offshore wind production facilities with the potential to support the creation of jobs across the Humber and North East. Read more

Low-carbon energy projects in the pipeline across Britain could compensate for almost all jobs lost through the pandemic, a new report suggests. The 668 projects identified in a report by EY-Parthenon for the European Climate Foundation could create 625,000 jobs, equivalent to 90% of the pandemic’s toll on the employment market. Around 135,000 of the jobs could be created in the North, Midlands and East Anglia alone. Scotland could account for another 57,000. More than 80% of the UK projects identified in the report are at the ‘permitting’ stage, and awaiting approval from planners. The European Climate Foundation said low carbon projects can kick-start a “massive green and renewable recovery to begin immediately across the world”. The report highlights a number of key actions needed to unlock the potential globally including governments establishing challenging national targets with clear accountability and commitment that could deliver confidence to investors and the private sector. Read more

Wind and solar energy capacity increased faster than ever last year, despite the pandemic seeing energy demand fall. BP’s latest review of world energy report shows solar capacity expanded by 127GW, while wind grew 111GW, almost double its previous highest annual increase. China was the largest contributor to renewables growth, followed by the US. The share of renewables in power generation increased to 11.7% from 10.3%, while coal’s share fell 1.3 percentage points to 35.1%, a new low in the history of BP’s reports. BP Chief Economist Spencer Dale said: “The global lockdowns had a dramatic impact on energy markets, particularly on oil, whose transport-related demand was crushed. “Encouragingly, 2020 was also the year the share of renewables in global power generation recorded its fastest ever increase – a growth that came largely at the expense of coal-fired generation. “These trends are exactly what the world needs to see as it transitions to net zero – strong growth in renewables crowding out coal. The importance of the past 70 years pales into insignificance as we consider the challenges facing the energy system over the next 10, 20, 30 years.” Read more

A consultation has been launched on proposals to help non-domestic energy consumers get more benefits from smart meter data. The proposals from BEIS aim to ensure non-domestic customers get “engaging feedback” on their energy consumption so that they can reduce consumption and manage costs. They will require energy suppliers to provide non-domestic smart meter customers with regular free information about their energy consumption. The proposals also aim to make it easier for non-domestic customers to share their data with third party innovators to support energy saving and net zero initiatives. BEIS said it was also seeking “more general views on how best government can support industry to drive forward innovation in the market for non-domestic smart meter data-driven services”. The consultation closes on 24 September. Read more