Informer Issue 596 - 02/05/2023

Mild weather saw GB’s power demand in the first three months of 2023 fall by around 10%, a record low for a first quarter. Latest figures from consultancy EnAppSys also showed the country returned to being a net importer of power in the first quarter following a period of high British electricity exports due to French nuclear outages and a European drought. Supplies from France and Norway were particularly significant in meeting GB demand between January and March. Lower demand also saw prevailing electricity prices drop from levels seen in recent previous quarters and fewer extremes were seen than was common for much of 2022. Gas prices fell across the quarter, coming in 21% lower than in Q4 2022 and 42% lower than in Q1 2022, helped by high European storage levels. However, the occasional cold snap, particularly in mid-January and early March, resulted in spikes in pricing and demand. The quarter was also notable for high levels of wind generation, with the 23.98TWh achieved only slightly below the record level of 24.82TWh seen in the previous quarter. Read more

Energy intensive businesses can now apply for savings of up to 20% on their wholesale energy costs. The Government has opened applications for sectors that are most affected by the rise in global energy prices to claim further discounts on their bills between 1 April and 31 March 2024. Ceramics and textiles are among sectors potentially in line to benefit as they use high amounts of energy to deliver their goods and are exposed to strong international competition, meaning they cannot raise their prices to cover the increase in costs they have faced. Businesses are being urged check to their eligibility and submit their applications as soon as possible. Minister for Energy Consumers and Affordability Amanda Solloway said: “We are beginning to see light at the end of the tunnel for global energy prices as Putin’s grip on the market weakens – but our vital energy and trade intensive industries remain uniquely exposed to these challenges. “We stand firmly behind British business and that’s why we’re protecting them with an additional offer of support so they can continue to thrive.” Read more

Falling investor confidence and red tape are threatening to hit Britain’s ambition to decarbonise power generation. MPs on the cross-party Business and Trade Committee said although huge strides have been made to tackle emissions in the power sector, the UK must continue to accelerate its shift away from fossil fuels to clean energy. “However, a suite of policy and regulatory barriers are blocking progress to achieving the Government’s target to decarbonise the power system by 2035,” it found. It said businesses which want to drive the transition forward on the ground are getting caught in red tape. The absence of an overarching delivery plan and lack of ownership of whole system costs has created “policy silos and sequencing problems”. It also noted low-carbon projects are now facing delays of up to fifteen years to connect to the electricity network, as well as a cumbersome planning regime. The report also said the UK investment proposition for the electricity sector has deteriorated at a time when the global race for capital in low-carbon projects has intensified. Recommendations include ensuring that planning and environmental authorities are properly resourced, an overhaul of the process to secure a grid connection and improved market signals to reward flexible services and reform of the energy retail sector. Read more

Ministers have been urged to take action to improve the resilience of critical infrastructure services to climate change effects. In a joint letter to the UK Government, the National Infrastructure Commission (NIC) and Climate Change Committee (CCC) said as dependence on the decarbonised electricity system increases, risks like storm damage to overhead wires could become more disruptive. It has set out five steps including setting clear goals for resilience and embedding resilience in infrastructure planning. “Record-breaking storms and temperatures in 2022 brought widespread disruption to energy and transport networks, with substantial impacts for people living and working across the UK,” the letter says. “As the climate continues to change, these impacts are likely to intensify. We urge you to develop more effective plans to improve the resilience of infrastructure, which is so critical to the UK’s economic prosperity.” Read more

Almost half of all UK businesses have already been impacted by the effects of climate change through extreme weather events, according to a survey. The study of more than 1,500 UK business decision-makers also found nearly three quarters are concerned about the impact over the next 10 years. Two thirds of those surveyed by global risk management and insurance broker Gallagher said a rise in global temperatures of 2°C – the upper limit set by the 2015 Paris Agreement – would have a “significant” impact on their business. The most common effect of climate change on British business is disruption from extreme weather events, including flooding, storms and heatwaves (52%), followed by increased operating costs (47%), supply chain issues (39%) and physical damage (35%). The research found that 15% of businesses have already moved premises due to climate change, while 16% have been forced to change their business model. However, more than half of all business leaders (53%) have not taken steps to mitigate against the risks. Neil Hodgson, Managing Director of Risk Management at Gallagher, said: “Climate change clearly poses a serious threat to British businesses – and the damage is already being done. The country is committed to reducing our emissions and reaching net zero by 2050 but, with half of businesses reporting impacts, it seems we are already on the backfoot.” Read more

Ofgem has published an open letter on prioritisation of electricity network charging and connections activity. It follows a letter published in November where it set out the reasons for deferment of certain areas of work and outlined prioritisation of resources.

A timetable of expected publication dates for code modification/modification proposals has been published by Ofgem.

The Department for Energy Security and Net Zero has launched a consultation seeking views on the design of a market-based mechanism to support the development of the market in low-carbon electric heat pumps.

Ofgem has published its Supplier Performance Report for July to December 2022.