Informer Issue 544 - 04/01/2022

The Government and energy industry leaders are set to continue talks over how to reduce the impact of rapidly rising gas and electricity prices. A crisis meeting was held between major suppliers and Business Secretary Kwasi Kwarteng and Ofgem just before Christmas and further talks are expected this week. It is understood leaders of energy firms have called for cuts to VAT and the relaxation of green levies on bills to relieve the pressure on consumers. Industry trade body Energy UK has warned bills could increase by a further 50% without government intervention. Although much of the focus is on the impact on households, a survey of members of the Federation of Small Businesses (FSB) found that energy costs are the biggest concern facing its members. The group warned rising costs could pose an “existential threat” to firms that are already struggling due to Covid restrictions. The Government said meetings with industry will continue “over the coming days and weeks to ensure UK consumers are protected". It has also said it intends to review the lessons from recent months as part of a wider refresh of the current Energy Retail Market Strategy with the aim of publishing an updated strategy as soon as possible once the market has stabilised. Read more

Ofgem has warned it won’t hesitate to take action if it finds evidence of manipulation of the balancing market. The regulator’s comments came in an open letter in which it noted that more than £1 billion had been spent on the balancing mechanism between September and November, twice the cost for the same period the previous year. Daily balancing mechanism costs reached a record high of £60 million on 24 November. The regulator said it was "closely monitoring the accuracy of the information" submitted to the system operator by participants. It also stressed it had taken action against a number of companies in the past over breaches of obligations under industry rules. The system operator is currently carrying out its own review of high balancing costs. Read more

Incentives need to be put in place for more efficient datacentres to limit unsustainable growth in internet and online services which represents a threat to energy security and emission targets, academics have warned. A report by the University of Sussex Business School said internet and datacentre demand is one of the fastest growing sectors of electricity consumption, accounting for about 10% of global demand and that is expected to at least double over the next decade. Datacentres have the fastest-growing carbon footprint within the information and communications technology (ICT) sector but the report said more sustainable designs offer better economies of scale, leverage circular economy concepts, and operate at higher energy efficiency, Benjamin Sovacool, Professor of Energy Policy at the Business School, said: “The internet and its digital practices now have potential negative sustainability impacts and without rapid intervention, those impacts threaten to worsen considerably. The global growth in ICT emissions is currently unsustainable, unchecked, and represents a threat to energy security and climate stability.” Read more

Almost 26GW of new solar PV capacity was connected to the grid in 2021 in a new record for the sector. Industry body SolarPower Europe said the figure represented an increase of 34% over the 19.3 GW installed in 2020 and broke the decade-long record of 21.4GW installed in 2011. It also predicted the forecast for the technology in the years ahead is bright. In the most-likely scenario, it forecasts that European solar will reach a cumulative capacity of 327.6GW by 2025 and up to 672 GW by 2030. This means the EU solar fleet will double within four years, from the 164.9 GW installed today.
Germany continues to lead the pack on overall installations, expecting to install 5.3 GW by the end of 2021 – representing an 8% growth since 2020. Aristotelis Chantavas, President of SolarPower Europe, said, “European solar continues to outshine expectations. To fully realise the bright potential of European solar, together with policymakers we must address the remaining barriers to the growth of the industry, whether through permitting or grid bottlenecks.” Read more

Plans for the first of two subsea transmission superhighways connecting Scotland and England have moved ahead. SSEN Transmission has submitted a Final Needs Case (FNC) to Ofgem for proposed 2GW link which is being developed with National Grid Electricity Transmission. The £2.1 billion project will run from Peterhead in north east Scotland to Yorkshire on the east coast of England. SSEN Transmission said the link is “essential to alleviate constraints on the GB transmission system, enable growth in renewables and support the transition to net zero emissions”. "In all credible future energy scenarios, it is beyond question that this link is required to alleviate current and future constraints on the GB transmission system,” it added. It has called for an early decision on the FNC to allow a competitive tender process in 2022. Read more