Informer Issue 529 - 14/09/2021

The UK government is putting up £265m a year to support renewable energy projects in the upcoming Contracts for Difference auction. The record funding - the lion’s share of which will support offshore wind - could kickstart more than £20bn of investment, according to a renewables industry body. BEIS has allocated offshore wind some £200m in the draft budget for the next auction with floating projects able to bid for a share of a further £55m alongside tidal, geothermal and wave. Established technologies, including onshore wind, solar and hydropower, have a £10m allocation. BEIS said the fourth round, which opens in December, aims to double the amount of power that was procured in the last CfD round, which concluded in 2019. Industry body RenewableUK welcomed the removal of the overall capacity cap for the round, which it said reflected the growing appetite from companies and investors in UK projects. Chief executive Dan McGrail said: “We could see investment of over £20bn on the back of the next clean power auction, which will boost jobs and the UK supply chain, and cut costs for consumers in the transition to net zero. “In this round we want to see just how low the price of new solar and onshore wind has fallen in the past five years, and make sure that the auction does the heavy lifting to take us towards our 2030 target of 30GW offshore wind.” Read more

Major global investors are asking private firms to actively measure and disclose their carbon impacts to close a transparency gap with publicly-listed companies. CDP, the environmental disclosure platform, has worked with investors to create what it said was the first ever standardised environmental disclosure questionnaire focused specifically on private companies. It said the aim of the pilot project was to increase disclosure from private companies of all sizes, and those with high-impact business activity that have historically avoided scrutiny on environmental issues and pressure to decarbonise. Claire Elsdon, Joint Global Director of Capital Markets at CDP, said investors require “decisive data that is consistent, comparable and comprehensive across both public and private markets”. “This pilot is essential to avoiding ‘emissions leakage’ between asset classes such as public companies selling high-carbon intense assets to private companies in a bid to avoid scrutiny and transparency. Stark warnings from the latest IPCC report that disastrous climate tipping points are nearing underline the urgency of this pilot’s work.” Read more

Wholesale energy prices are continuing to set new highs amid continuing low wind generation and soaring gas costs. Energy market consultancy EnAppSys said day-ahead peak prices on Monday on EPEX hit £1675.3/MWh and £1,750/MWh on Nordpool. Volume weighted baseload prices reached £461.17/MWh for EPEX and £379.82/MWh for Nordpool. It said the latest highs were being driven up by prices on interconnectors. Last week also saw a new high price record for the GB market system imbalance price at £4037.80/MWh. Commodity intelligence firm ICIS said prices across British and European power markets had been driven to highs in recent weeks due to extremely low wind generation coupled with “extreme bullishness in commodities and carbon prices”. The volatility in energy markets has been blamed for contributing to two more smaller suppliers, PFP Energy and MoneyPlus Energy, ceasing to trade. Read more

COP26 President Alok Sharma has insisted the COP26 climate summit must go-ahead despite calls from some environmental groups for it to be postponed. The Climate Action Network said a “safe, inclusive and just” COP26 in November would be impossible given the Covid-19 situation and issues around travel and quarantine, particularly for delegates from poorer countries. The campaign group said issues under deliberation at this COP such as climate finance, loss and damage and carbon market rules are extremely important to developing countries. “The full and meaningful representation of those on the frontlines of the climate emergency, and with the least resources to cope, is critical to produce a credible political outcome from COP26,” it said. However, Sharma said it was vital world leaders come together and set out decisive commitments to tackle climate change. “We are working tirelessly with all our partners, including the Scottish Government and the UN to ensure an inclusive, accessible and safe summit in Glasgow with a comprehensive set of Covid mitigation measures. “This includes an offer from the UK Government to fund the required quarantine hotel stays for registered delegates arriving from red list areas and to vaccinate accredited delegates who would be unable otherwise to get vaccinated. “Ensuring that the voices of those most affected by climate change are heard is a priority for the COP26 Presidency and if we are to deliver for our planet, we need all countries and civil society to bring their ideas and ambition to Glasgow.” Read more

High industrial electricity prices are slowing down efforts to electrify and decarbonise parts of industry, according to a report. The research by University College London (UCL) and published by the Aldersgate Group said the UK has “significantly higher industrial electricity prices than European competitors”. It said seizing the opportunity offered by the rapidly declining policy costs of renewables must now be a priority. Key recommendations include enabling an acceleration in investment in the cheapest forms of mature renewable energy such as onshore wind, accompanied by a predictable, rising carbon price to reduce investor risk. The report also urges an integrated approach to network development, funding, and pricing. Michael Grubb, Professor of Energy and Climate Change at UCL Institute for Sustainable Resources, said: “The UK electricity system has already undergone part of its low carbon transition. Thanks in large part to carbon pricing, coal is no longer significant – and that in itself reduces the impact of carbon costs on UK electricity prices. “But industry is still carrying the legacy cost of building up renewables, which are part of the larger energy transition. Those costs could be spread more evenly, and in particular, reforms are needed to ensure that industry can benefit both from access to the now-cheap renewables, and from smoother participation in the capacity market.” Read more