Informer Issue 573 - 15/11/2022

Major businesses have urged world leaders to raise their ambitions on climate action and act swiftly as the COP27 summit draws to a close this week. The call from over 200 leading firms came amid concerns that the focus on a target to limit the average rise in temperatures to 1.5C may be softened as negotiators look to find agreement between rich and poorer nations. The We Mean Business coalition, which aims to catalyse private sector action to slash emissions, said it was vital that governments uphold their pledges. “Governments must strengthen their commitments and plans, and implement them without delay. Every fraction of a degree of global heating matters,” said the coalition. “We need governments, starting with the world’s most advanced economies, to uphold their commitment to keep global temperature rise to 1.5°C and to move swiftly to its delivery. “Thousands of companies, unions, investors, cities, states and regions are committed to 1.5°C, and already taking science-based climate action: delivering clean energy solutions, developing innovative finance mechanisms, and building the resilience of vulnerable communities. National leaders must demonstrate solidarity and decide where they stand.” Read more

Renewables have saved the need for 27 terawatt hours (TWh) of UK gas generation so far this winter, according to new research. The Energy and Climate Intelligence Unit (ECIU) said that since the start of October, renewable power has already effectively displaced the equivalent of 3% of UK annual gas demand and 6% of UK net gas imports. The report pointed out that the more renewable power that’s generated the less gas needs to be sourced and paid for, and the more the UK can keep its gas storage topped up. Other sources of generation, including nuclear and biomass, accounted for around 6TWh – saving the equivalent to 1.5% of annual UK gas demand. Dr Simon Cran-McGreehin, Head of Analysis at ECIU, said: “Every swoop of a wind turbine blade means less gas that we have to buy. As batteries and pumped hydro expand, we’ll be less dependent on gas to play its ‘balancing’ role, insulating us from international gas markets. “The same goes for insulation and electric heat pumps. If government ramps up investments, next winter could be less challenging for the grid and less worrying for households.” Read more

Mutualisation of the Renewables Obligation (RO) scheme has been triggered for the fifth year in a row after several suppliers failed to meet their obligations for 2021/22. The update from Ofgem came after the late payment deadline of 31 October passed. The regulator said it was currently finalising its calculations and checks on late payments and the total shortfall figure will be published around the beginning of December 2022. Under mutualisation, the shortfall of money owed under the renewables support scheme is shared among suppliers who have paid into the scheme. Last year’s shortfall figure stood at £218.3m after a significant number of energy suppliers collapsed owing money to the RO scheme. Read more

Failures by energy regulator Ofgem have come “at a considerable cost to billpayers”, according to MPs on the Public Accounts Committee. A report said the failure of 29 energy suppliers had left a bill of £2.7bn for consumers which it said was due to “Ofgem’s failure to effectively regulate the energy supplier market”.
It found Ofgem “did not strike the right balance between promoting competition in the energy suppliers market and ensuring energy suppliers were financially resilient”.
Committee Chair Dame Meg Hillier said: “It is true that global factors caused the unprecedented gas and electricity prices that have caused so many energy supplier failures over the last year, at such terrible cost to households. “But the fact remains that we have regulators to set the framework to shore us up for the bad times. Problems in the energy supply market were apparent in 2018 - years before the unprecedented spike in prices that sparked the current crisis, and Ofgem was too slow to act.” Read more

Smart local energy systems can make a major contribution to achieving Net Zero delivery but barriers remain, according to the findings of trials. The trials being run by Innovate UK under its Prospering from the Energy Revolution (PFER) project show the systems – which bring together energy generation, storage, demand and infrastructure and integrates them at a local level such as a town or city - could help areas decarbonise more rapidly and support the drive to Net Zero. While there is no shortage of potential private investment in local energy systems, the findings show investors are discouraged by unstable business models due to uncertainty and perceptions of risk. The trial projects have also identified policy and regulatory barriers including the fact that current energy markets are designed for a centralised energy system, and the lack of a joined-up, ’whole systems’ approach. Rob Saunders, Director of the PFER challenge at Innovate UK, said: “It’s increasingly recognised that locally-integrated approaches to energy can bring major benefits, helping local communities to prosper while also helping deliver our net zero ambitions.” Read more

Ofgem has published its decision to approve a change to the Balancing and Settlement Code to enable Elexon to implement and act as a scheme administrator for the Government’s new EBR Scheme for non-domestic electricity consumers. More details here.

Ofgem has issued a Provisional Order to Delta Gas and Power over concerns about its financial position. The regulator said it has been unable to show it is financially resilient in the current volatile energy market following a ‘stress test’. More details here.

BEIS has published the latest updates to discount rates for the Energy Bill Relief Scheme for fixed and default/variable contracts. More details here.

The UK has signed up to a joint declaration from energy importers and exporters on reducing GHG from fossil fuels at COP27. More details here.