Informer Issue 553 - 21/06/2022

Regulator Ofgem has announced a series of measures aimed at improving the financial health of energy suppliers so they can withstand future shocks in the energy market. The proposed changes aim to reduce the risk of suppliers going bust and provide better protection for customers if they do. They are part of wider measures to encourage sustainable business models and stop risky behaviour. The regulator pointed out the cost of moving customers to new suppliers from 28 failed ones since September 2021, including new suppliers having to buy extra gas at short notice while prices were at record highs and replacing lost customer credit balances and green levy payments, was £94 per household. The proposals aim to better protect consumer credit balances and RO payments in the event of company failure, and improve the capital adequacy of suppliers to ensure they can survive critical periods. Jonathan Brearley, CEO of Ofgem, said the energy market remains “incredibly volatile” and geopolitical issues continuing to apply “massive pressure”. “By ensuring that suppliers are operating well-financed, sustainable, and have more resilient business models, we can avoid the supplier failures we saw last year which caused huge stress and worry and added costs to everyone’s bills,” he said. Read more

EDF’s West Burton A coal power station is to stay open for six months longer than originally planned to help meet demand this winter. Two of the station's four 500MW units will remain operational until March next year following a request from the Government.
Most of the capacity of one of the turbines will be available for supply to National Grid ESO with the second turbine providing back-up if needed. Matt Sykes of EDF said: "In April this year, EDF was asked by Government to consider a further extension, to support energy security in light of the ongoing energy crisis. "I want to thank employees and all those connected to West Burton A for their flexibility and commitment to helping in what are extraordinary times for the energy sector." Read more

Norwegian energy firm Equinor has struck a deal to deliver extra gas to the UK over the next three winters. The agreement with Centrica was welcomed by Business and Energy Secretary Kwasi Kwarteng as an important move in ensuring security of supply amid the Ukraine crisis. Kwarteng stressed buying more gas did not mean the UK was “turning its back on renewables” or on new technologies such as hydrogen. Equinor said the new agreement would add around a billion cubic metres of gas per year to an existing contract with Centrica. Centrica said the deal will see Equinor deliver sufficient gas over the coming three winters to heat an additional 4.5 million homes. Norway is the single biggest supplier of gas to the UK. Read more

Rising energy bills are forcing manufacturers to increasingly look at on-site generation, according to a new report. A survey carried out by energy services firm Aggreko found the majority of UK manufacturers said the spike in prices has significantly impacted their margins and competitiveness. Over 60% of manufacturers said they are now considering generating their own electricity using distributed solutions, a 12% increase from a similar survey carried out three years ago. Chris Rason, Managing Director at Aggreko Northern Europe, said: “The rising cost of energy has long been a concern for the UK manufacturing sector, though recent events have escalated the scale of this challenge to entirely new levels. “The results of our latest report indicate that many UK manufacturers are looking to on-site power generation as a solution to the current energy crisis. However, capex budgets and restrictive contracts remain a key barrier here.” Read more

An acceleration of the global energy transition as the world recovered from Covid-19 has not materialised, according to a major report. The Renewables 2022 Global Status report from global body REN21 said the rebound in economic activity seen led to a 4 per cent increase in global energy demand, which was met mainly by fossil fuels and was further compounded by the rise in energy prices following the invasion of Ukraine. In the electricity sector, record additions in renewable power capacity - up 17% from 2020 - were unable to meet the overall increase in electricity consumption. The overall share of renewables in the world’s final energy consumption has stagnated – rising only minimally from 8.7% in 2009 to 11.7% in 2019. Rana Adib, REN21 Executive Director, said: “Although many more governments committed to net zero greenhouse gas emissions in 2021, the reality is that, in response to the energy crisis, most countries have gone back to seeking out new sources of fossil fuels and to burning even more coal, oil and natural gas.” Read more