Informer Issue 587 - 28/02/2023

The UK will have the lowest wholesale electricity prices in Europe by 2035 under ambitions set out by the new energy department. Grant Shapps, Secretary of State for the Department for Energy Security & Net Zero, said the goal would be achieved by dramatic growth in renewable and nuclear generation. “Our mission is to make sure the UK has clean, homegrown energy which is secure, and lowers bills for homes and businesses,” he said in a video address. “I’ll set Britain on a course to energy security by radically increasing production of renewables and nuclear and creating hundreds of thousands of green jobs in the process.” In an earlier interview, Shapps stressed that the “most successful economies in the world are the ones that have cheap energy prices”. The new department was set up as part of a reshuffle earlier this month which saw the responsibilities of BEIS divided up. Read more

A fast-track approach to planning for major infrastructure projects, including offshore wind farms, is to be piloted under a new government action plan. The Department for Levelling up, Housing & Communities has published a policy paper looking at how to speed-up development of nationally significant infrastructure projects (NSIP). The NSIP process has already reduced the time taken for major projects to achieve development consent, but the policy paper said the system “does not always move with the focus and speed we need”. Local Government Minister Lee Rowley said: “For us to meet our goals, it is vital we have the right infrastructure in place now and for the future. “The plan we have published demonstrates the commitment across government to ensuring the planning system supports us to improve our energy security and deliver the major transport links and essential facilities this country needs to thrive.” Measures under the action plan include establishing a new ‘fast-track’ consenting timeframe option for projects that meet quality standards Read more

The latest T-4 Capacity Market auction saw a clearing price more than double the previous record. The auction, for back-up power to be delivered in 2026/27, cleared at £63/kW and energy consultancy EnAppSys pointed out that in some years the auction has cleared at just £6.44/kW. Aurora Energy Research said the 43GW of capacity procured will cost British electricity consumers £5.7bn over 15 years, indexed to inflation. “The auction procured only 600MW more than the absolute minimum it could have procured, highlighting how expensive new projects have become, both in terms of absolute cost increases and increasing uncertainty for investors,” it said. Gas took by far the largest share, although battery storage continued to grow with 1.29GW of awarded capacity. Read more

A five-point action plan to speed up grid connections is being put in place to help ensure Britain remains on its Net Zero path, As part of a new approach National Grid ESO is operating a transmission entry capacity amnesty until April 2023, allowing developers to terminate their connection contracts without incurring liabilities, freeing up capacity in the queue. It is also updating its modelling assumptions to reflect current connection rates and reducing the assumption that most projects in the queue will connect, as well as changing the treatment of storage, including batteries on the network to allow them to connect faster and free up capacity for other projects. A new two-step approach for grid connection applications will be introduced in England and Wales. In Scotland, the changes will be applied without the need to implement a new two-step process. The system operator said only 30-40 per cent of projects in the connection queue make it to fruition, but the it operates on a first come, first served basis. “This can result in projects further up the queue holding back those that are more readily able to supply our country with the energy it needs, even if those further up the queue are not ready to plug in,” it said. Read more

Around 300 businesses across the UK are to benefit from measures to ensure the energy costs for key UK industries are in line with other major economies around the world. The UK Government’s British Industry Supercharger offers support to sectors particularly exposed to the cost of electricity, such as steel, metals, chemicals and paper. Proposed changes under the Supercharger – set to be consulted on in the Spring – will exempt firms from certain costs arising from renewable energy obligations, such as the Feed in Tariff, Contracts for Difference and the Renewables Obligation, as well as Capacity Market costs. Business and Trade Secretary Kemi Badenoch said: “This is carefully crafted support that will mean strategically-important UK industries remain competitive on the world stage. “We will back these businesses to keep on growing our economy and delivering high-quality jobs and investment into the UK, as well as the products we rely on for our everyday lives and work.” Read more

Ofgem has published the domestic price cap levels for 1 April 2023 to 30 June 2023. More details here.

The regulator has also published a document setting out the key dates and deadlines for the Offtaker of Last Resort supplier levelisation process for the upcoming financial year. More details here.

The Department for Levelling up, Housing & Communities has published a policy paper setting out an action plan for reforms to the planning process for nationally significant infrastructure including large-scale renewables. More details here.

BEIS and the new Department for Energy Security and Net Zero has launched a consultation on the design elements of a low carbon hydrogen certification scheme. It closes on 28 April. More details here.