Informer Issue 579 - 03/01/2023

Hundreds of millions of pounds of investment in renewables is being put at risk by a windfall tax on generators, an industry body has warned. The Association for Renewable Energy and Clean Technology (REA) said the Energy Generator Levy would have major impacts on the UK’s long-term energy security, costs to bill payers and the ability to reach Net Zero. The REA said the renewables sector is key to tackling the volatile costs of fossil fuels, and its treatment “must be fair and equitable in relation to the oil and gas sector”. “Under no circumstances should the levy risk the solvency of businesses that have such a vital role in our long-term energy security,” it said. The REA is urging the Government to provide investment allowances within the levy to the renewables and clean technology sector as already awarded to the oil and gas sector under its levy scheme. “Failing to do so risks undermining much needed investment crucial for renewable energy and clean technology investment to achieve Net Zero,” the REA warned. Read more

A House of Commons committee has concluded that hydrogen can play an important role in decarbonisation but cautioned it is not a panacea for reaching Net Zero by 2050. The Science and Technology Committee believes hydrogen will help decarbonise particular sectors, such as ones where electrification is not possible, and be valuable as a means of storing energy. However, it said hydrogen is not likely to be practically and economically viable for mass use in the short and medium term for heating homes or fuelling passenger cars due to the significant cost, technological and infrastructure challenges associated. The MPs have urged the Government to give the industry more clarity over how and when it will make decisions about the role of hydrogen in the UK economy. It has asked the UK Government to outline a series of decision points between now and 2050 that will set out in practical terms the role of hydrogen in the UK’s future energy system. Committee Chair Greg Clark MP said: “Hydrogen can play an important role in decarbonising the UK’s economy, but it is not a panacea. “There are significant infrastructure challenges associated with converting our energy networks to use hydrogen and uncertainty about when low-carbon hydrogen can be produced at scale at an economical cost. “But there are important applications for hydrogen in particular industries so it can be, in the words of one witness to our inquiry, “a big niche”. Read more

Changes to the way balancing costs are collected have been given approval by Ofgem ahead of their introduction in April. A code modification will fix Balancing Service Use of System (BSUoS) charges at a certain level instead of the current system where they change every half hour. The level would be set and published in advance, and would be in place for a fixed period of time. The regulator said it believed that changing the current system will lead to “greatly simplified arrangements from a user perspective”, in particular for suppliers as it should be simpler to forecast and include within consumer prices. It pointed out that the current volumetric charge can vary significantly from period to period,and can fall below £0/MWh or reach prices of over £100/MWh. In its decision on modifications raised by the system operator to put the change into effect, Ofgem directed that a modification which provides a fixed period of 6 months be made. Ofgem also said it was open to the development of further options which might build upon the modification as a new baseline. Read more

The Scottish Government has set an ambition to have 20GW of onshore wind installed by 2030. The target is more than double the 8.7GW currently installed and would be enough to power the equivalent of 19.5 million homes. Scotland’s finalised Onshore Wind Policy Statement also sets out plans for a strategic leadership group to be formed to maximise supply chain and community benefit opportunities from the sector’s expansion. Scotland’s Net Zero & Energy Secretary Michael Matheson said: “As a proven technology and one of the most affordable forms of energy, onshore wind will be vital to Scotland's future energy mix, creating and sustaining good green jobs for the sector while improving our energy security and resilience.” The ambition for increased capacity will be included in Scotland’s new draft Energy Strategy and Just Transition Plan which will be published in early January. Read more

The UK has signed a major cooperation agreement with European countries to pave the way for greater collaboration on offshore wind development. The Government said the move would support the UK’s targets to increase offshore wind fivefold to 50GW by 2030. The Memorandum of Understanding with the North Seas Energy Cooperation (NSEC) enables closer cooperation with other countries to develop renewables projects in the North Seas - specifically projects linking electricity interconnectors and windfarms. The countries involved include Belgium, Denmark, France, Germany, Ireland, Luxembourg, Netherlands, Sweden and Norway. Minister of State for Energy and Climate, Graham Stuart, said: “The development of renewables in the North Seas is critical for accelerating our clean transition and boosting energy security for the UK and our European neighbours.” Analysis by National Grid Electricity System Operator shows that a well-integrated grid linked to offshore wind farms can deliver savings to consumers of up to around £3 billion. Read more

Elexon is inviting feedback on its 2023/24 business plan which sets out its approach on customer service and value while delivering the BSC rule changes needed to help support Net Zero. More details here.

Scottish Renewables has published its submission to the UK Parliament's Environmental Audit Committee's Inquiry on Technological innovations and climate change: onshore solar energy. More details here.

BEIS has published the latest decisions on energy infrastructure development applications. More details here.

Ofgem has published its decisions on code modifications CMP361 and CMP362 ahead of changes to the way BSUoS charges are collected. More details here.