The Informer

This week's energy news headlines: New rules are introduced to prevent generators making excess profits from the balancing mechanism; The ESO’s Demand Flexibility Service is to return this winter after successful trials; A new Energy Secretary is in place following a cabinet reshuffle; Our industry round-up includes the latest updates from Government

  • Ofgem acts over market manipulation

    Regulator Ofgem has announced new measures aimed at preventing generators attempting to make excessive profits through the balancing mechanism. The move follows an Ofgem probe into concerns that some generators may be taking advantage of existing rules after balancing costs tripled in the winter of 2021/22 to over £1.5 billion. The new Inflexible Offers Licencing Condition bans a practice where generators would schedule themselves to stop generating early in an afternoon and due to plant shutdown times that would mean they were switched off for the crucial evening peak in demand. They would then offer to resume generating later that same day, at a greatly increased price. The new rules apply to any electricity generators with plant shutdown times of over an hour. Eleanor Warburton, Ofgem Acting Director for Energy Systems Management and Security said: “We believe the new licence condition strikes the right balance between protecting consumers and ensuring they pay a fair price for their energy while also enabling a competitive electricity market that provides fair returns for generators.” Read more

  • ESO confirms return of Demand Flexibility Service

    Plans to expand the Demand Flexibility Service which rewards businesses and homes for cutting energy consumption have been unveiled by National Grid ESO. The service underwent a series of trials last winter and the system operator has confirmed it will return this coming winter. The ESO expects to run 12 test events between November 2023 and March 2024. The Guaranteed Acceptance Price (GAP) for the first 6 tests will remain at £3,000/MWh. The remaining tests from 1st January 2024 onwards will either continue to be underpinned by the GAP or become competitive, subject to the total volumes participating in the service. Jake Rigg, Corporate Affairs Director, ESO, said: “Across last winter the Demand Flexibility Service successfully demonstrated the interest of consumers and businesses in playing a more active role in balancing our electricity needs and to be rewarded with savings for their action in the process.” Read more

  • New energy secretary named in cabinet reshuffle

    Claire Coutinho has been named as the new Secretary for Energy Security and Net Zero after Grant Shapps was appointed as Defence Secretary. Coutinho was previously a parliamentary under-secretary of state with responsibility for childcare. She said was “delighted” with the appointment. "I will work with the Prime Minister to safeguard our energy security, reduce bills for families, and build cleaner, cheaper, homegrown energy,” she said. RenewableUK chief Dan McGrail welcomed the appointment. "There is already a lot of goodwill in the sector towards Claire, who championed offshore wind in her maiden speech in 2020, highlighting our global leadership in this technology. "She was also a member of the Conservative Environment Network, which champions the case for moving faster and further on renewables to deliver cheap power for consumers and strengthen our energy security.” Read more

  • Funding boost to accelerate Sizewell C

    The Government has announced a £341m funding boost to accelerate preparations for the Sizewell C nuclear plant in Suffolk. The extra money will help ready the site for construction, procuring key components from the project’s supply chain, and expanding its workforce. The Government said the funding would build on its existing £870m stake and help drive progress towards the long-standing objective of reaching a Final Investment Decision on a new large-scale nuclear project this Parliament. Minister for Nuclear and Networks Andrew Bowie said: “Sizewell C will be a significant part of the revival of nuclear energy in this country – providing clean, home-grown power to millions of homes, providing thousands of jobs and ending reliance on foreign electricity to bolster our energy security. “This funding announcement is a clear demonstration of the government’s commitment to this vital project, and will mean the site will be shovel-ready, and work able to start, much more quickly.” Read more

  • Loss of power compensation to rise

    Compensation for businesses and households that lose power as a result of severe weather events has increased significantly under new rules announced by Ofgem. The maximum payout is now £2,000 - up from £700 – following the regulator’s findings of its review into the response to Storm Arwen by distribution network operators (DNOs). Network companies that fail to follow the rules and protect consumers’ interests could face multi-million-pound fines. Ofgem has also reduced the length of the time consumers have to wait for additional compensation from 12 hours to 6 hours after the initial payment period and introduced an inflation adjustment mechanism, so compensation payments remain in line with inflation Akshay Kaul, Director General of Infrastructure for Ofgem, said: “Lessons have been learnt by the industry following our review into Storm Arwen, but the frequency of extreme weather events is only set to increase, so we need to make sure network services are resilient. “Network operators and suppliers should get ready for the coming winter. We will not hesitate to hold them to account if they fall short of the standards customers have a right to expect.” Read more

  • Regulatory news and consultations round-up

    The Department for Energy Security and Net Zero has published the latest Monthly data on the number of certificates issued for generation under the Renewables Obligation.

    Ofgem has published its determinations on Tier 2 Contracts for Difference disputes for Allocation Round 5.

    Ofgem has published the total obligation figure for the Renewables Obligation 2022/23. The figure is 121.8m ROCs. Suppliers who did not meet their obligations in full by the end of 1 September will need to make a late payment by 31 October.

    National Grid ESO has published its Electricity Ten Year Statement 2023, its view of future transmission requirements and the capability of Great Britain’s National Electricity Transmission System (NETS) over the next ten years.

    The Capacity Market prequalification submission window is now open. Participants can apply to bid for agreements to receive capacity payments based on the auction clearing price for the 2024/25 and 2027/28 delivery years by 5pm on 19 September.