Informer Issue 525 - 17/08/2021

A review of green electricity tariffs is being launched amid concerns some energy companies could be exaggerating their environmental benefits. The review announced by Energy Minister Anne-Marie Trevelyan will examine whether the current system is suitably transparent and whether the rules around what can be called a ‘green’ tariff remain fit for purpose. Energy companies are currently able to market tariffs as ‘green’ even if some of the energy they supply to customers comes from fossil fuels, as long as this is offset by purchasing enough Renewable Energy Guarantees of Origin (REGO) certificates to cover their customer base. With the UK having more than quadrupled its renewable electricity generation since 2010, the Government said it was keen to ensure consumers signing up to a green tariff know their energy is coming from green sources of electricity generation. The government is also publishing a separate call for evidence on third party intermediaries and non-domestic brokers to seek views on whether a general regulatory framework is needed. Trevelyan said: “I want people to know that when they sign up to a green tariff, they are investing in companies that make a conscious choice to invest in renewable energy. “Part of that is ensuring companies are being as transparent as possible on where their power comes from.” Read more

The competition watchdog has broadly supported Ofgem’s plans to reduce returns for networks in its initial findings after appeals were brought by a number of companies. National Grid ESO and ScottishPower had been among the companies to appeal against Ofgem’s proposals for returns under the RIIO-2 mechanism. Ofgem said the Competitions and Markets Authority had found in favour of the regulator on most grounds of appeal, including the reduction in returns for investors. Ofgem’s Chief Executive Jonathan Brearley, said: “Ofgem is fully focussed on keeping bills as low as possible for customers while supporting investment to net zero greenhouse gas emissions. "We will continue to engage with the CMA to finalise these price controls, and look forward to working with the industry to deliver efficient investment which will benefit both consumers and the planet.” Responding to the CMA's summary, David Smith, Chief Executive at the Energy Networks Association, said: “These are provisional findings which we will now review in detail. It is vital that the final settlement gives network companies a robust framework to invest in a sustainable, Net Zero energy system in the most efficient way possible for customers.” The CMA’s findings supported a number of the networks’ complaints, including over an ‘outperformance wedge’ based on expected operational performance during RIIO-2. Read more

The planned dates for the next Contracts for Difference (CfD) round to support major renewable energy projects have been confirmed. The application window will be open from 13 December to 14 January and a sealed bid window will be open between 9-26 March under the shortest timeline planned. Successful applicants will be notified in April under BEIS’s shortest timeline or July under its longest. The Government has set a cap of 12GW for the fourth round of auctions but industry body RenewableUK recently called for it to “demonstrate greater ambition” by raising the cap to at least 15GW. It said over 14GW of clean energy capacity is already eligible to compete in this year’s auction, and that could rise to over 23GW by the end of the year – including over 16GW of wind - if the immediate pipelines of projects currently seeking planning approval are consented in a timely manner. RenewableUK is also calling for CfD auctions to be held annually from 2023 onwards, rather than once every two years, “to maintain a constant, steady flow of new projects”. Read more

Plans to develop 5GW of low carbon hydrogen production capacity by 2030 to power homes and businesses have been set out the Government. Business & Energy Secretary Kwasi Kwarteng said hydrogen has the potential to “transform the way we power our lives and will be essential to tackling climate change and reaching Net Zero”. He said a UK-wide hydrogen economy could be worth £900 million and create over 9,000 high-quality jobs by 2030. It could play an important role in decarbonising polluting, energy-intensive industries like chemicals, oil refineries, power and heavy transport like shipping, lorries and trains, by helping these sectors move away from fossil fuels. Director of Policy at the Association for Renewable Energy and Clean Technology (REA) Frank Gordon welcomed the plans. “The REA urged the Government to provide certainty for investors, deliver a technology neutral approach and highlight the range of low carbon pathways. The Hydrogen Strategy starts to answer those calls and offers a positive vision for the role of hydrogen in meeting the UK’s net zero ambitions.” The strategy looks to accelerate both blue hydrogen - made using fossil fuels but where emissions are captured and stored underground and green hydrogen, which is made using renewable energy Read more

The vast majority of small businesses have yet to put targets in place to reduce their emissions, according to a new report. Only one in 10 of firms said they measure their carbon footprint, despite half of respondents to the survey acknowledging their customers are worried about the environment Cost is considered the biggest barrier, with 30% claiming lack of finance is holding them back, according to the study by the British Chambers of Commerce and O2. The research also showed only one in seven (13%) have set targets to reduce their emissions – down from one in five (21%) when firms were surveyed before the pandemic in February 2020. In addition, almost two thirds (64%) of businesses surveyed say they don’t see net zero targets as a high priority in the wake of the pandemic, although half (49%) admit their customers are worried about the environment. Shevaun Haviland, Director General of the BCC, said: “This research is a real eye-opener and shows just how big a challenge the UK’s net zero target is. The dual impacts of the pandemic and Brexit have been a huge body-blow to many businesses, so it’s unsurprising that targeting emissions has taken a back seat. Read more