Informer Issue 570 - 25/10/2022

Energy industry leaders have voiced concerns over proposals which they claim give the Government sweeping new powers over the sector. In a letter signed by Energy UK Chairman Lord Hutton and the chief executives of a number of major companies, they argue that the Energy Prices Bill threatens to undermine independent regulation of the sector. The letter to Business Secretary Jacob Rees-Mogg urges that the Bill is reconsidered and amended “so that it is solely focused on ensuring that crucial support can be delivered for households, businesses and other non-domestic consumers this winter”. The letter acknowledges that Government has a vital role in providing strategic direction for the regulator, but said its work needs to be done “independently, expertly and objectively”. The letter also expresses concerns over the cap on generator revenues which it said could put investment in the UK’s low carbon industry in jeopardy at a time when it is most needed to ensure our long-term energy security. In a separate briefing document, Energy UK also said proposals to impose a revenue cap on low carbon generators “threatens to be more damaging and punitive than that levied on oil and gas producers”. “In particular, while the windfall tax for oil and gas producers contains generous exemptions through an investment allowance, no such provision exists with the revenue cap,” it points out.
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System operator National Grid ESO said businesses and homes can become virtual power plants this winter as it announced more details on its demand flexibility service. Under the security of supply scheme, which launches next month, homes and businesses will be rewarded for shifting their electricity consumption at peak times. The system operator said it anticipates paying a rate of £3,000 per megawatt hour (MWh) and estimated that for a consumer that could mean a typical household could save approximately £100, and industrial and commercial businesses with larger energy usage could save “multiples of this”. The figure is significantly higher than originally planned. It said it was now working with the government, businesses and energy providers “to encourage as high a level of take-up as possible”. “We are confident this innovative approach can provide at least 2 gigawatts of power – about a million homes’ worth.” said Fintan Slye, director of National Grid ESO. “We are particularly keen to get businesses involved right across Britain.” Read more

Businesses are being urged to accelerate their climate change focus after a survey showed only 10% measure their emissions comprehensively. Although the report by the Boston Consulting Group (BCG) said some progress has been made in the past year, it has been slow overall across industries and regions. The 10% of companies who said they measure their emissions across scope 1,2 and 3 edged up from 9% in last year’s survey. Respondents also estimate a 25% to 30% average error rate in their emissions measurements.
However, the report said the survey also showed that the better a company measures its emissions, the more effectively it can reduce them with 64% of respondents who measure the full scope of their emissions and 45% who partially measure them noting a significant reduction. Hubertus Meinecke, global leader of BCG’s Climate & Sustainability practice, said: “The results of this year’s survey tell a clear story—the time has come to urgently accelerate progress in terms of the measurement and reduction of emissions. “Leaders need to demonstrate true convictions and a willingness to drive cultural changes—at both the company and governmental level, and organizations need to embrace the adoption of the digital and AI tools that are available to provide them with the most accurate and comprehensive measurement.” Read more

The development of batteries for energy storage is being boosted by a £211m Government funding deal. The record support package will be delivered through the Faraday Battery Challenge, which backs world-class scientific technology development and manufacturing scale-up capability for batteries in the UK. The Government said the funding will help to seize on opportunities for private investment and economic growth in industries where fast charging batteries will be essential, such as domestic energy storage and electric vehicles. Business Secretary Jacob Rees-Mogg said: “Safe and powerful batteries are central to our plans to grow the industries of the future. From our world leading renewables industry, to our growing electric vehicle sector, secure supplies of batteries are key to delivering jobs and prosperity.” Rees-Mogg said the Faraday Battery Challenge has brought the UK’s “greatest minds and best facilities together to develop the innovations that will help us achieve this goal”. Read more

Geothermal energy could meet much of the UK’s heating needs if more support was given to the sector, according to MPs. The Environmental Audit Committee (EAC) said the Government has been slow to exploit the potential of geothermal - energy stored beneath the surface of the Earth - and has not integrated it fully into the net zero strategy. “This appears to be holding back a sector which could be transformative for the UK’s capacity to meet climate goals, use homegrown energy and grow the economy,” it said. The committee said the range of geological formations available in the UK can serve many different purposes on a larger scale, such as in district heating and in power generation. It also said exploiting the resource could drive considerable economic benefits with the sector potentially supporting as many as 25,000 jobs by 2050. Environmental Audit Committee Chairman, Rt Hon Philip Dunne MP, said: “This energy is beneath our feet and is ready to be explored to test its commercial viability. I expect Ministers will wish to reflect carefully on the evidence the Committee received and reconsider the potential role of geothermal energy in heating UK buildings and providing power while aiding the drive towards net zero emissions targets.” Read more

Ofgem has approved a modification under the Balancing and Settlement Code to avoid a potential issue with cash-out calculations if National Grid ESO needed to call on the winter contingency service available from 1 October to 31 March. More details here.

The regulator has also published its decision on modifications to the Electricity System Operator licence conditions. The modifications set out how much TNUOS and BSUOS revenue the ESO is allowed to collect. More details here.

Energy UK has published its response to BEIS’s Review of Electricity Market Arrangements. More details here.

A call to evidence as part of the Government’s independent review of its 2050 Net Zero target closes on 27 October. The review aims to look at how the target can be met while also maximising growth and minimising costs. More details here.