Informer Issue 577 - 13/12/2022

The system operator asked two coal-fired power units to be warmed up in case they were needed to meet demand as temperatures plunged this week. It was the first time the tool had been used since contracts were agreed with operators of a number of coal-fired stations to be on standby this winter. The system operator later stood down the Drax units after it decided there was adequate available contingency for Monday evening. It said the measure should give the public confidence in energy supplies. “The ESO as a prudent system operator has these tools for additional contingency to operate the network as normal and the public should continue to use energy as normal,” it said. A trial of the ESO’s demand flexibility service, which rewards domestic consumers for reducing demand during times of high demand, was also carried out on Monday evening. As well as very cold weather, still conditions meant wind farms have been contributing less than normal to the grid. Day-ahead electricity prices also hit record highs with levels of £674.78/MWh baseload and £2,585.80/MWh for evening peak seen on EPEX. Read more

Business lobby group the CBI has urged the Government to extend energy bill support for businesses beyond the current end date in March next year. It wants to see the Energy Bill Relief Scheme for significant energy users continue and additional cashflow support for vulnerable businesses, especially SMEs. The CBI said the scheme has so far protected firms from major financial losses and saved many from collapse. A CBI survey of nearly 700 businesses shows that firms expect their energy costs to more than double if support was no longer available from April 2023, and once any fixed priced contracts expire. The survey shows that two-thirds of firms (67%) would be exposed to an increase in energy bills when the Energy Bill Relief Scheme expires at the of March, rising to three quarters (74%) by the end of June next year. Matthew Fell, CBI Chief Policy Director, said: “The high cost of energy is dominating the decisions that businesses are making each and every day. There are no easy answers in all this, but the Government will have to keep supporting the most vulnerable firms to help them stay competitive, to build resilience and in some cases to avoid collapse.” Read more

The total shortfall left by energy suppliers across the Renewables Obligation (RO) schemes for 2021-22 stood at just under £120m, according to figures released by Ofgem. The regulator said that of the suppliers who failed to comply by the 31 October late payment deadline, 27 are either in administration or have had their licence revoked. The regulator also confirmed it redistributed a total of £44m from the late payment fund. Suppliers received £7.04 per ROC presented after the redistribution of the buy-out fund and received an extra £0.40 per ROC from the late payment fund. This means that the final recycle value for 2021-22 is £7.44. Mutualisation of the RO scheme was triggered for the fifth year in a row after a number of suppliers failed to meet their obligations for the year. Under mutualisation, the shortfall of money owed under the renewables support scheme is shared among suppliers who have paid into the scheme. The previous year’s shortfall figure stood at £218.3m after a significant number of energy suppliers collapsed owing money to the RO scheme. Read more

Restrictions on building new onshore wind farms in England are to be relaxed following a rebellion by Conservative MPs. A number of backbenchers had threatened to try and force through a change to the current moratorium by amending legislation going through parliament. Housing Secretary Michael Gove said the Government planned to revise planning guidance to enable local areas to identify sites "suitable for onshore wind". New wind farms will still require local approval and the Government said it was also exploring ways to encourage partnerships which could see nearby residents get discounts on energy bills. However Lisa Nandy, Shadow Levelling-up Secretary, said it was important to see the details of the Government’s plans. “If it is a fudge that leaves in place a very restrictive system for onshore wind – the cheapest, cleanest form of power – it would continue to deny Britain lower energy bills and improved energy security during an energy crisis,” she said. Read more

The UK’s first new coal mine in 30 years has been given the go-ahead despite protests from environmental groups. The West Cumbria Mining project near Whitehaven would produce coking coal for steel production and its supporters argue it will create jobs and reduce the need for imported coal. However, opponents say the bulk of the mine’s output will be exported. The Government said it believes the effects of the development on carbon emissions would be “relatively neutral and not significant" and was in line with the Government's policies on reducing emissions. A number of senior Conservatives, including COP26 President Alok Sharma, had criticised the plans. The Green Party said the decision left the Government’s environmental credentials "in tatters". Read more

National Grid ESO has launched a GB Connections Reform project to understand and address challenges with the current connections process. It has invited views on the project and is holding a series of events. More details here.

Ofgem has published details of the Renewables Obligation Late Payment Distribution for 2021 – 2022. It paid a total of £44m to suppliers who presented ROCs this year. More details here.

BEIS has published policy statements and indicative draft statutory instrument regulations relating to the Energy Security Bill. More details here.

BEIS has published an update to its ‘Energy Trends: UK renewables’ document which provides data including capacity, electricity generation and liquid biofuels consumption. More details here.