Informer Issue 576 - 06/12/2022

Ofgem has approved £22.2 billion of investment by electricity distribution networks over the next five years in a move it said would lower returns for investors and drive more efficiencies. The regulator said the focus of the RIIO ED2 price controls beginning in April next year was on the shift away from importing fossil fuels and a reliance on expensive gas Ofgem said a boost to grid capacity through the investment will pave the way for cheaper, greener energy as more products become reliant on electricity. It said the price control will allow for the scale of investment required without adding to customers' bills.
Akshay Kaul, Ofgem Interim Director, Infrastructure and Security of Supply Group, said: “The economics of energy have shifted with home-grown cleaner renewables like wind and solar energy proving cheaper than costly imported gas. “These new low carbon sources of generation will also need to be connected to an expanded electricity network to meet the growing demand for electricity with millions more electric heat pumps in homes and electric vehicles (EVs) on the road expected over the coming years.” David Smith, Chief Executive of Energy Networks Association (ENA said the importance of the price control “cannot be overstated”. “The announcement must enable the networks to deliver the government’s ambitions to give customers access to affordable, sustainable and secure power whilst also addressing longer-term challenges,” he said. Read more

A £700m investment from the UK Government has seen plans for the Sizewell C nuclear plant take a major step forward. The formal signing of contracts between the UK and French energy group EDF ended speculation that the plant was under review and will also see previous backer China General Nuclear Power Corporation exit the project. The £20bn site will eventually generate around 7% of the UK’s electricity. Business and Energy Secretary Grant Shapps said the global backdrop meant the UK needed "British energy for British homes". "This historic deal giving government backing to Sizewell C's development is crucial to this, moving us towards greater energy independence and away from the risks that a reliance on volatile global energy markets for our supply comes with.” The Government’s also said it was committed to developing a pipeline of new nuclear projects, beyond Sizewell C and is setting a new vehicle, Great British Nuclear, to oversee the plans. Shadow climate change secretary Ed Miliband said Labour backed the development of Sizewell C and other new nuclear plants. Read more

An ambitious target to reduce the UK’s energy demand by 15% by 2030 has been set out as part of a series of measures to secure energy independence. The target, backed by a new £1 billion ECO+ insulation scheme, comes as the Government resumes work on its delayed Energy Security Bill. The insulation scheme will be supported by a major expansion to the Government’s public awareness campaign aimed at helping households cut back on energy waste and deliver warmer homes and buildings and cheaper energy bills. Energy UK's Policy Manager Louise Shooter said improving energy efficiency will help deliver long-term energy security and achieve our Net Zero targets. "The government is right to build on the success of the ECO scheme, however Energy UK published proposals for a bigger and voluntary scheme, rather than an obligation, as this would help support a more competitive and market-led approach to growing demand for energy efficiency.” Read more

The UK Government’s climate change advisor has urged it to ensure it plays an important international leadership role in driving global implementation of measures in the wake of COP27. In a document setting out next steps following the summit, the Climate Change Committee (CCC) said action at home on key policy areas would be vital to underpin the UK’s wider contribution. The CCC said it was now vital for the UK to define its international role in tackling climate change and biodiversity loss. After exiting the EU and convening COP26, the CCC said the UK Government should decide what its priorities are in future negotiations and communicate these at a high level. As a major finance centre and sponsor of the multilateral development banks, it also should pay particular attention to its positions on mobilising finance for climate change. To deliver the UK’s contributions to the Paris Agreement, the Govenment must also implement its Net Zero Strategy to deliver its domestic targets and international commitments and strengthen its response on climate adaptation, which the CCC said “remains weak”. Read more

The pace of improvement on energy efficiency is rapidly accelerating, fuelling hopes that it will make a major contribution to global efforts to reach Net Zero. Latest analysis from the International Energy Agency found that after several years of slow progress, governments and consumers have increasingly turned to efficiency measures as part of their responses to fuel supply disruptions and record-high energy prices. Global investments in energy efficiency increased by 16% on 2021, and preliminary data indicates that in 2022 the global economy used energy 2% more efficiently than it did in 2021, a rate of improvement almost four times that of the past two years, and almost double the rate of the past five years. The IEA said it the current rate of progress can be built upon further in the coming years, then 2022 could mark a vital turning point for efficiency, which is one of the key areas for international efforts to reach net zero emissions by 2050. IEA Executive Director Fatih Birol, said: “Amid today’s energy crisis, we are seeing signs that energy efficiency is once again being prioritised. Energy efficiency is essential for dealing with today’s crisis, with its huge potential to help tackle the challenges of energy affordability, energy security and climate change.” The IEA estimates efficiency improvements need to average about 4% a year this decade to align with its Net Zero by 2050 scenario. Read more

BEIS has published a summary of responses to its request for information about emerging generating technologies for the future Capacity Market. More details here.

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

Ofgem is consulting on the Electricity System Operator Reporting and Incentives Arrangements: Guidance Document. The closing date is 17 January. More details here.

Ofgem has published its decision on which projects it will fund under the 2022 Electricity Network Innovation Competition. More details here.