Informer Issue 568 - 11/10/2022

The system operator has said it is “cautiously confident” that there will be adequate margins for power supply this winter, although it warned it is set to be a challenging period. National Grid ESO’s Winter Outlook base case indicates de-rated margins of 3.7GW or 6.3% which is similar to recent winters. The system operator highlighted the additional tools it had to manage risk, including Winter contingency contracts and the demand flexibility service, which will pay businesses and consumers to move their electricity use out of peak hours. It has also agreed winter contingency contracts for coal. However, National Grid ESO also said that it was highly likely that the wholesale price of both gas and electricity “will remain very high throughout the winter outlook period”. Analysts at LCP Energy Analytics recently warned that the UK could experience 10 hours of insufficient electricity supply this winter. The forecast was based on a scenario where no energy was imported through interconnectors with Europe due to continued nuclear shortages in France and low hydroelectric levels in Norway. Read more

Businesses are being warned to be on the alert for scammers looking to take advantage of misunderstandings over the Government’s energy bill support scheme for non-domestic customers. Regulator Ofgem said firms were being targeted by scammers, amid reports that billpayers were being urged to apply for help under the scheme and to provide bank details. Under the Energy Bill Relief Scheme (EBRS) for non-domestic customers, customers will benefit from a discount on wholesale energy prices. As with the Energy Price Guarantee for households, customers don’t need to take action or apply to the scheme to access the support which will automatically be applied to bills. The Government has also issued a warning to domestic consumers over fraudulent messages asking for personal details to claim domestic energy support. Consumer group Which? recently warned about bogus emails using the Ofgem logo and branding sent to consumers claiming to offer an ‘energy bill rebate scheme’. Read more

Ofgem has approved a temporary cap on Balancing Services Use of System (BSUoS) charges over the winter. The move aims to protect major energy users from an unexpected spike in costs this winter due to the ongoing energy crisis. The cap of £40/MWh will apply until new charging arrangements come into effect in April 2023, with the money recouped during 2023/24. Ofgem said it accepted BSUoS costs are significantly higher at present than in previous years, and that they are expected to increase over the coming winter period. However, it also said that it does not believe that high BSUoS costs alone would warrant intervention and added “it is proportionate only to identify and cap exceptional BSUoS costs”. Ofgem said the move would benefit large users on pass-through contracts in particular by protecting them from costs that may not have been foreseen. BSUoS charges are currently recovered from suppliers and large generators based on the amount of energy imported or exported onto the network (£/MWh) within each half-hour period. Read more

The Government has selected a site for the UK’s first fusion energy plant and is providing backing of £220m for the first phase of the prototype project. The West Burton power station site in Nottinghamshire will be the home for the plant which aims to be built by 2040. Fusion, based on the same physical reactions that power the sun and stars, has the potential to deliver safe, sustainable, low carbon energy. The Government said the programme to develop the plant will create thousands of highly skilled jobs during construction and operation. Earlier this year, scientists in the UK made what they said a major breakthrough in efforts to develop practical nuclear fusion. The JET Laboratory in Oxfordshire beat its own world record by producing 11 megawatts of power over five seconds, more than double what was achieved in similar tests back in 1997. Read more

Investment in low-carbon energy needs to rise dramatically in the years ahead to meet the goals of the Paris Agreement, according to a new report. BloombergNEF (BNEF) has looked at energy supply investment ratios between low-carbon and fossil fuels to assess levels of climate aligned energy investment around the world. The report found that total energy supply investment averaged $1.6 trillion per year between 2020-2022, with some 48% allocated to low-carbon sources. Although low carbon investment has increased rapidly since the Covid-19 pandemic began, the report says that between 2021 and 2030 it needs to ramp up significantly. It says the ratio required across the decade is approximately 4 to 1 in favour of low carbon compared to 0.9 this year. Historically, the total energy supply investment ratio has not crossed the 1:1 mark, peaking at 0.97:1 in 2020, mainly as oil and gas investment dropped due to a price plunge. BNEF said this decade was “a vital time to kick-start investing in the energy transition and prevent back-loading emission reductions”. Read more

BEIS has published a table providing the daily discount rates under Energy Bill Relief Scheme (EBRS) available for business and other non-domestic energy users who are on both fixed and default/variable contracts with their energy supplier. More details here.

Ofgem has issued a progress update on work to redevelop the Renewables and CHP Register with the establishment of a new system, the Renewable Electricity Register (RER). The RER is now planned to launch during Q1 2023/24. More details here.

The regulator has also published its response to BEIS’s review of the energy intensive industries exemption scheme. More details here.

National Grid ESO has issued a consultation on Firm Frequency Response (FFR), covering areas including new Service Terms and Procurement Rules for the daily procurement of Static FFR. The consultation closes on 28 October. More details here.

EnergyUK has published its response to the Government’s consultation on a Delivering a smart and secure electricity system. More details here.