The Informer

This week's energy news headlines: Latest figures show average day-ahead electricity prices rose 72% last year despite a dip in demand; The Crown Estate hails a clutch of offshore wind deals as a landmark for Net Zero hopes; A UN head warns that the 1.5C temperate limit is in serious danger; Our industry round-up includes the latest updates from Government departments and energy regulators.

  • Average electricity prices up by more than 70% in 2022

    Average day-ahead electricity prices were 72% higher last year than in 2021 and more than four times greater than levels seen in 2020, according to new figures. The GB Electricity Market Summary from consultancy EnAppSys also showed a 6% decrease in GB electricity demand from 2021 levels, the lowest seen over the last decade. The reduction was particularly noticeable from Q2 onwards which EnAppSys said reflected the impact of the war on the market and also unseasonal weather conditions including a summer heatwave and exceptionally mild autumn. The figures also showed GB was a net exporter of electricity over the course of Q2, Q3, and Q4, supplying power to continental Europe. System balancing prices saw record high averages and peaked at an all-time high price of £4,035.98/MWh on the 24th of January, Total renewable output level during the year was 119.9TWh, up from the 107.5TWh seen in 2021. Renewables contributed 43.4% to the generating mix with wind farms being the biggest source of. Total wind output in 2022 was 77.6TWh, a 21% increase in output from 2021 which had seen 62.4TWh from the wind fleet. Read more

  • Offshore wind deals hailed as milestone for Net Zero

    Six major new offshore windfarms could be operating by the end of the decade after the signing of leasing agreements. The Crown Estate said the “landmark” deals covered projects which could generate enough power for seven million homes. Three of the six projects are located off the North Wales, Cumbria and Lancashire coast, and three are located in the North Sea off the Yorkshire and Lincolnshire coast. The agreements are the culmination of the Crown Estate’s Offshore Wind Leasing Round 4 and developers can now further progress their plans for the projects which will contribute to the Government’s target of 50GW of offshore wind capacity by 2030 on the road to Net Zero. Dan Labbad, CEO of The Crown Estate, said: “The UK’s offshore wind achievements to date are nothing short of remarkable, and this next generation of projects point to an even more exciting and dynamic future. “They demonstrate the far-reaching value that our world-class offshore wind sector can deliver for the nation: home grown energy for all, jobs and investment for communities, revenue for the taxpayer, clean energy for the benefit of the environment and a considerate, sustainable approach which respects our rich biodiversity.” Read more

  • Battle to keep 1.5C alive ‘to be won or lost’ this decade

    The commitment to limit global temperature rises to 1.5C is at severe risk, the head of the UN told the Davos summit of world leaders. Antonio Guterres, Secretary-General of the UN, said without further action the trajectory is heading towards a 2.8C increase. “The consequences, as we all know, would be devastating. Several parts of our planet would be uninhabitable. And for many, it would mean a death sentence,” he warned. Guterres said the battle to keep the 1.5C limit alive will be won or lost in this decade. “So, we need to act together to close the emissions gap, and that means to phase out progressively coal and supercharge the renewable revolution, to end the addiction to fossil fuels, and to stop our self-defeating war on nature.” He said the private sector had a critical role to play. “The truth is that more and more businesses are making net-zero commitments. But benchmarks and criteria are often dubious or murky. This can mislead consumers, investors and regulators with false narratives – and it feeds a culture of climate misinformation and confusion, and leaves the door open to greenwashing.” Read more

  • Government sets out vision for utilities regulation

    The Government has set out its vision for modernising the economic regulation of the energy sector. BEIS had first announced plans for the utilities review, which also covers the water and telecoms sectors, early last year. The review will cover areas including how regulators can enhance competition and innovation, how to encourage greater investment and improving the experience of consumers. It follows a commitment in the government’s National Infrastructure Strategy to produce an overarching policy paper in this area. “The government agreed with the National Infrastructure Commission’s recommendation that, though the UK’s regulatory framework has delivered significant benefits, it needs updating and strengthening as it is increasingly facing emerging and long-term challenges that it was not designed to address,” it said. BEIS said the paper is the first step to updating economic regulation and it will launch a consultation setting out “more detail on a package of measures to ensure the UK model of economic regulation fits the needs of the modern age”. Read more

  • Surge in funding deals for battery storage projects

    Corporate funding in the energy storage sector soared by 55% last year amid growing demand. Figures compiled by Mercom Capital Group showed funding deals reached a record $26.4 billion. A total of 28 energy storage companies were also acquired in 2022 – the most since 2014. “Funding into energy storage continued to grow at record levels in 2022; however, some of the funding activity shifted from venture capital and private equity to public market and debt and debt financing,” said Raj Prabhu, CEO of Mercom Capital Group. He said the boom in acquisitions reflected “maturity in energy storage markets and assets”. There were also six public listings for energy storage companies in 2022 compared to four in 2021. Read more

  • Regulatory news and consultations round-up

    The Government has begun work on its vision for modernising the economic regulation of the utilities sectors. An open consultation on the proposals will be held in the Spring. More details here.

    BEIS has published the outcome of its consultation into the Hydro Benefit Replacement Scheme and the Common Tariff Obligation. More details here.

    BEIS has published its Electric Vehicle Smart Charging Action Plan looking at the steps that government and Ofgem will take to deliver energy flexibility from EV charging. More details here.

    National Grid ESO has published its formal response to Ofgem’s BP2 draft determinations response. More details here.

    The system operator is hosting the ESO Virtual Energy System 2023 Conference at the Institute of Engineering and Technology in London on 10 February. The event will discuss digitalising energy across GB. More details here.