Informer Issue 575 - 29/11/2022

Ofgem has launched a package of reforms aimed at strengthening the resilience of the energy market. The proposals include the introduction of capital adequacy requirements for suppliers to reduce the risk and cost of business failures. The regulator will also be requiring suppliers to ringfence Renewable Obligation receipts and will be “closely monitoring” the use of credit balances. Ofgem is now consulting on the reforms which it said were part of its overall plans to create a more stable and viable market in the interests of both consumers and suppliers.
Jonathan Brearley, Ofgem’s Chief Executive, said: “We want suppliers to be able to be innovative and dynamic, while also making sure they are financially stable, and that customers’ money is protected. This is a delicate balance and while Ofgem want well capitalised businesses that can weather price fluctuations, we also don’t want to block the market for new suppliers or force suppliers to sit on lots of capital they could be investing in innovative ideas.” Ofgem said it was now seeking views across the industry on whether it has struck the right balance between resilience and competition. Read more

Former prime ministers, Boris Johnson and Liz Truss, are among around 30 Conservatives backing a bid to get the Government to relax a ban on new onshore wind. Former cabinet member, Simon Clarke, has tabled an amendment to the Levelling Up Bill to allow wind farms in rural areas where there is community consent. “We should let local communities decide whether or not they want onshore wind, perhaps linked to sensible incentives from energy companies, and not apply a blanket ban,” he said. “Onshore wind can lower our constituents’ bills, boost our energy independence and safeguard our environment, and I am delighted so many colleagues are supporting this important amendment.” The president of the COP26 climate summit, Alok Sharma, has also voiced his support for lifting the ban. “Faster deployment of renewables, including onshore wind, is needed to deliver on the UK’s 2035, 100% clean electricity target,” he said. Although there has been no official response from Downing Street, Business and Energy Secretary, Grant Shapps, hinted in an interview that there may be more onshore wind projects “where communities are in favour of it”. Read more

National Grid ESO this week stood down plans to use its new demand flexibility service to cut household consumption during periods of tight supply. The system operator had on Monday flagged that it may need to use the service, which rewards businesses and households for shifting consumption away from times of peak demand, for the first time amid low temperatures and outages on the French nuclear generation fleet. However, it later said it would use “routine tools” to manage margins and said demand was not at risk. Last week, the system operator had issued the first capacity market notice in three months, although later withdrew it. Although the system operator said it had been confident that electricity margins were sufficient, the notice was triggered by its automated system. Meanwhile, the first two trials under a domestic demand reduction trial have seen around 200,000 customers reduce their collective consumption by 220MW. Octopus Energy said its second trial saw customers reduce their energy demand by a collective 112MW, following on from the first which saw 108MW of grid flexibility provided. A further 10 sessions will be staged over winter. Read more

Five energy storage projects are to receive over £32m of Government support to develop innovative technologies to boost the resilience of the UK’s electricity grid. The projects will share funding from the second phase of the Government’s Longer Duration Energy Storage Competition to develop technologies that can store energy as heat, electricity or as a low-carbon energy carrier like hydrogen. The Minister for Climate, Graham Stuart, said: “Accelerating renewables is key to boosting our energy resilience. Energy storage helps us get the full benefit of these renewables, improving efficiency and helping drive down costs in the long term.” Successful projects include Edinburgh-based StorTera which will receive £5.02m to build a prototype demonstrator of its single liquid flow battery (SLIQ) technology. It will offer flexibility to the grid by storing electricity which can then be released when weather dependent technologies such as wind turbines and solar panels have periods of decreased energy generation. Read more

The system operator has awarded contracts to six companies to provide stability contracts in a move it said would save £14.9bn in the years ahead. National Grid ESO said the contracts will also help reduce the carbon intensity of the grid by replacing current stability solutions provided by synchronous generation such as fossil fuel power stations with ones which don’t use carbon. Julian Leslie, ESO Head of Networks, said: “These new contracts represent a major milestone in delivering a low-carbon network for the future and will help support the delivery of our 2025 ambition to be able to operate the network at zero-carbon. “These contracts demonstrate the type of savings that can be made and the importance of investing in net-zero now in order to unlock benefits for consumers for the future.” Read more

BEIS is seeking views on proposals for the Energy Company Obligation Plus (ECO+) scheme to deliver energy efficiency measures in homes across GB from 2023-2026. The closing date is 23 December. More details here.

BEIS has published the latest energy trends and prices statistics for September 2023. The figures include monthly production and consumption of coal, electricity, gas, oil and total energy. More details here.

Following Ofgem’s consultation in June, it is now consulting on revised proposals to strengthen financial resilience in the retail energy market. The response deadline is 3 January. More details here.

Ofgem has published its decision to reject the Distribution Connection and Use of System Agreement change proposal DCP297: 'Network Interventions SLA Enhancement'. More details here.