The Informer

This week's energy news headlines: The Government has launched a review to better target future support for businesses on energy bills; Dramatic growth is forecast for the energy storage market in the years ahead; Renewables industry leaders voice concern over plans for a revenue cap; and our industry round-up includes the latest updates from Government departments and energy regulators.

  • Review of business energy bill support launched

    The Government has launched a review of help for businesses over high energy costs with the aim of targeting those most affected once the six-month support period ends on 31 March. As part of new Chancellor Jeremy Hunt’s update on the mini-budget, he said the review of the Energy Bills Relief Scheme would help design a new approach that will cost the taxpayer “significantly less than planned whilst ensuring enough support for those in need”. “Any support for businesses will be targeted to those most affected. And the new approach will better incentivise energy efficiency,” he said. The Government said it will engage with businesses, organisations and trade associations across the UK so that “we can better understand energy needs”. As part of the changes announced yesterday, the Energy Price Guarantee for domestic customers will now remain in place until April next year instead of two years as was initially planned. Read more

  • Energy storage market set to grow 15-fold by 2030

    The global energy storage market is set to see dramatic growth by 2030 as countries look to ramp up capacity, according to new forecasts. BloombergNEF (BNEF) said installations are projected to reach a total of 411GW by the end of 2030, 13% higher than its previous estimate, with the rise driven by recent policy developments. The amount of new energy storage capacity coming online during the remainder of this decade will be more than Japan’s entire power generation capacity in 2020. Although the US and China are set to remain the two largest markets, Europe is catching up with a significant ramp-up in capacity fuelled by the current energy crisis. Although the scale-up of global energy storage capacity is imminent, supply chain constraints could slow additions. On top of pandemic-related supply chain issues, inflation, high transport costs and raw material prices have made battery cells more expensive over the last year. Helen Kou, an energy storage associate at BNEF and lead author of the report, said: “The energy storage industry is facing growing pains. Yet, despite higher battery system prices, demand is clear.” Read more

  • Industry concerns over renewables revenue cap

    Renewables industry leaders have voiced concerns over the Government’s plans for a cap on generator revenues. As part of the new Energy Prices Bill, the Government has announced it will legislate for a Cost-Plus Revenue Limit. The Government has not set out what level the limit will be set at, or specified how long the measure would be in place for. It is proposing that the Cost-Plus Revenue Limit will apply to renewable generators that are outside of the fixed-price Contracts for Difference (CfD) scheme – mainly older wind and solar energy projects – and will consider whether it will apply to nuclear and biomass generation. RenewableUK’s CEO Dan McGrail said a price cap “will send the wrong signal to investors”. “A price cap acting as a 100% windfall tax on renewables’ revenue above a certain level, while excess oil and gas profits are taxed at 25%, risks skewing investment towards the fossil fuels that have caused this energy crisis,” he said. To limit the negative impacts of a cap, McGrail said it was “essential it is set at a level that doesn’t make the UK less attractive to investors than the EU, is technology neutral and has a clear sunset clause in place”. Read more

  • More flexibility key to low-carbon energy system

    Very high levels of flexibility will be needed to ensure resilience of a decarbonised energy system, according to a new report. Regen’s updated ‘Day in the Life 2035’ report, compiled with National Grid ESO, explores how the future decarbonised electricity system could operate on challenging days. It concludes a decarbonised electricity system with very high levels of renewable power can operate and be resilient with the right system planning, operation, infrastructure, generation mix and technology innovation. “Many of the key innovations, technologies and ancillary service markets that would be required to operate a fully decarbonised electricity system are already in development,” found the report. However the analysis also highlights some critical aspects that would need to be in place, including very high levels of flexibility, low carbon dispatchable generation, storage and interconnectors to neighbouring markets. “Without these, we would continue to rely on a fleet of fossil fuel generation and miss out on the UK’s decarbonisation targets,” it said. Read more

  • People power critical to cut UK emissions

    A third of the UK’s emissions reductions must come from people’s behaviours changing, according to a House of Lords committee. The Environment and Climate Change committee has now urged the Government to look at launching a public campaign and to use regulations and taxation to steer the shift needed. The Committee found that while the Government has introduced some policies to help people adopt new technologies, like electric cars, that focus has not been replicated in other areas. It concluded that there has been too great a reliance on as yet undeveloped technologies to get the UK to net zero and a reluctance to help people cut carbon-intensive consumption. Committee Chair Baroness Parminter, said: “People power is critical to reach our environmental goals, but unless we are encouraged and enabled to change behaviours in how we travel, what we eat and buy and how we heat our homes, we won’t meet those targets.  “Polling shows the public is ready for leadership from the Government. People want to know how to play their part in tackling climate change and environmental damage.” Read more

  • Regulatory news and consultations round-up

    HM Treasury and the Bank of England have opened the Energy Market Financing Scheme (EMFS) for applications. The scheme provides a guarantee to commercial banks to provide additional lending to energy firms. More details here.

    BEIS has launched a feasibility study for an energy system ‘digital spine’. It aims to establish the needs case, benefits, scope and costs of a project. More details here.

    The second Phase 3 application window for the Public Sector Decarbonisation Scheme is now open to applications. It will provide up to £635m of funding up to 2025. Applications will close on 31 October. More details here.

    Ofgem has published its decision to approve Balancing and Settlement Code modification P395. This change introduces the required processes to ensure Final Consumption Levies are correctly calculated and charged to liable parties. More details here.