Informer Issue 590 - 21/03/2023

Renewable industry leaders have warned that the £205m budget for the first annual CfD auction this year is too low to unlock potential investment in green energy. The pot for the fifth CfD allocation round includes £170m for established technologies such as offshore wind and a £10m ring-fenced budget for tidal stream technologies which the Government said would help the thriving sector develop. Minister of State for Energy Security and Net Zero Graham Stuart said the budget announcement, the move to annual auctions and continued investment in renewable energy “will limit the impact of events like Putin’s illegal war in Ukraine and drive our overriding priority for the UK to have amongst the cheapest wholesale electricity prices in Europe”. However, RenewableUK said that against a backdrop of inflationary pressures, the budget and parameters set are “too low and too tight” to unlock all the potential investment in wind, solar and tidal stream projects which the industry could deliver. RenewableUK’s Economics and Markets Manager Michael Chesser said: “Concerns about energy bills and energy security are at a record high, so the UK should be trying to maximise investment in low-cost clean energy, to provide relief for billpayers who’ve been hit hard by massive spikes in global gas prices over the past year. “At a time when the US and EU are bending over backwards to offer incentives for renewable energy developers to come to them to build new projects, the UK is sending the wrong investment signals.” Read more

Business leaders and environmentalists said the Chancellor’s green measures in his Spring budget failed to go far enough to tackle the energy challenges facing the country. The confirmation of long-awaited plans to invest in small-scale nuclear and carbon capture were among steps announced to help boost the UK's low-carbon domestic energy supply, and the extension to extend energy bill support for households was welcomed by consumer groups. However, Jason Torrance, interim chief executive at UK100 which represents local government leaders, said the Chancellor's energy security plans “ignored” renewables as the cheapest and quickest way to boost UK energy production and accelerate Net Zero action. Sam Alvis, head of economy at Green Alliance, said although extending the energy price guarantee provides some protection for households from higher energy costs, the budget “doesn't do enough to address the reasons why this country and its households are so exposed to volatile fossil fuel prices”. "With the US and Europe spending huge sums on clean energy and green technologies such as electric vehicles, we needed a Budget that would encourage businesses to invest a green pound here rather than a green dollar or euro elsewhere. Instead, it feels like we are developing short term investment schemes instead of a long term plan for building the green economy of the future." Read more

Competing demands on land use in the UK are putting the nation’s Net Zero target at risk, according to a new report. Land is under growing pressure from renewable generation, green infrastructure, industry, affordable housing, food security and biodiversity, pointed out the report from law firm TLT and real estate consultancy Gerald Eve. A more robust and flexible national planning policy and clarity around the priority given to different land uses would allow local authorities to make land use allocations which best benefit local communities and work towards Net Zero. The research also said that current grid structure will need a complete overhaul to support the levels of renewable generation necessary to achieve Net Zero and ensure UK energy security. Increased investment in the grid should be encouraged by updates to local and national planning policy. Maria Connolly, Head of Future Energy and Real Estate at TLT, said: “A period of monumental transformation lies ahead for the UK if we are to reach Net Zero by 2050. A comprehensive overhaul of the existing grid infrastructure is needed to support increased renewable energy generation, distribution, storage, and stability, and complementary technologies such as hydrogen electrolysis and carbon capture. “Maximising land use is a critical part of this, to support the creation of a system that can deliver Net Zero.” Read more

Plans for a new interconnector linking the UK and Norway have been dealt a blow. Norway’s Ministry of Petroleum and Energy has refused NorthConnect’s license application for the proposed 1,400MW power cable. The Government cited issues such as limitations in grid capacity, the risks around increased exposure of the Norwegian power system to those in other countries, and major shifts underway in the European energy system and power market. Norway’s Minister of Petroleum and Energy Terje Aasland said: “It is important for the government to ensure that we have a power system that meets the basic objectives of power supply at all times. “We need the output capacity in hydropower and will not expose it to further export. In my opinion, the consequences of establishing a new overseas cable indicate that a license will not be granted for the project.” Although Norway said interconnector capacity may need to increase in the future, it said that may be several years off. Read more

Energy regulator Ofgem has issued a £2.1m penalty to a supplier following an investigation. Ofgem found that United Gas & Power Ltd (UGP), which serves around 2,700 non-domestic customers, had breached standard licence conditions including the deliberate overcharging of customers. Cathryn Scott, Director of Enforcement and Emerging Issues at Ofgem said: “UGP's behaviour was unacceptable. No matter what financial difficulties companies may find themselves in, it is plainly unjustifiable and wholly unacceptable to deliberately overcharge customers to boost revenue. “In addition to this overcharging, it is concerning that UGP failed to return credit owing to former customers and retained such large sums in their own account; only refunding customers following Ofgem's intervention.” Ofgem said the penalty imposed “should send a strong signal to all suppliers in the market to act with the utmost care and integrity when it comes to customers' money”. The regulator pointed out that UGP proactively and prior to Ofgem’s intervention apologised to the customers it overcharged and made significant goodwill gesture payments to them. UGP will pay a nominal fine of £1 and £2.11m will be paid to Ofgem’s Voluntary Redress Fund to be distributed to appropriate organisations for the benefit of energy consumers. Read more

The Department for Energy Security and Net Zero has announced a consultation seeking views on proposals for an extension to the current Climate Change Agreement scheme, and on further proposals resulting from an earlier consultation. The consultation closes on 10 May.

Ofgem has issued a call for evidence on the ESO's three roles and its deliverables laid out in its business plan from April 2021 to date. The closing date is 20 April.

Ofgem has published a timetable of expected publication dates for its decisions, or other updates, on code modification/modification proposals.

The next trial BSC Upcoming Change Proposals meeting will be held on 23 March. The public meetings, allow interested industry Parties to feed in to change proposals that are likely to be raised in the near future.