Posted on: 19/03/2024
This week's energy news headlines: A House of Lords committee urges the government to act fast to scale-up storage; The first auction for a new balancing service has been staged by the system operator; Renewable industry leaders voice concerns over plans to shake-up the energy market. Our industry round-up includes the latest updates from Government departments and energy regulators.
Energy UK has published its response to the Government’s consultation on long duration energy storage.
The Department for Energy Security and Net Zero has launched a second consultation on its review of electricity market arrangements (REMA). It closes on 7 May.
The latest monthly figures on Renewables Obligation certificates and generation have been published.
The Gas and Electricity Markets Authority has launched an investigation into suspected breaches of competition law. The investigation concerns a suspected abuse of a dominant position and is at the initial evidence gathering phase.
The Government has published updated data on the UK’s renewables sector, including capacity, electricity generation and liquid biofuels consumption.
The Government must act fast to ensure that energy storage technologies can scale up in time to play a vital role in decarbonising the electricity system and ensuring energy security by 2035, according to a House of Lords report.
The Science and Technology Committee’s report on long-duration energy storage concludes that it can reduce curtailment of renewables and grid congestion.
In turn this can bring down electricity costs and allow a greater amount of cheap renewable power to be integrated into the system.
However, the committee says coordinated effort is needed to unlock investment in long-duration storage and to ensure a strategic reserve of storage is delivered.
“This is essential both to achieve Net Zero and to insulate the UK from future energy supply shocks such as the 2021–22 energy crisis,” it said.
The system operator has hailed the success of the first auction of a new balancing service which could deliver hundreds of millions of pounds in cost savings.
The first Balancing Reserve auction for day ahead capacity was held on the ESO’s new enduring auction capability platform.
The service enables the system operator to secure day-ahead procurement for energy reserves rather than buying energy on-demand. The ESO estimates the new service could deliver costs savings of up to £821m over four years.
The first auction secured both positive and negative reserve volume. Ten providers entered the auction with 47 units taking part, submitting over 5,500 bids.
The enduring auction capability platform allows market providers to access multiple markets at the same time, which makes the procurement of balancing services more efficient and allows the ESO to select the option that offers the best value for consumers.
Renewable industry leaders have voiced concerns over the impact of some proposed changes to the energy market.
The Government is looking at major reforms under its Review of Electricity Markets (REMA) to accelerate investment in clean electricity generation and build a cost-effective system.
Although the renewables industry have welcomed the aims of the review it has also warned that certain options “could do more harm than good”.
One of the measures on the table is a move to zonal pricing, which would divide the wholesale electricity market into zones with different prices in a bid to incentivise generation to locate close to demand and alleviate constraints on the transmission grid.
However. Solar Energy UK and RenewableUK, warned the disruption caused by the implementation of zonal pricing could create uncertainty for investors, increasing the costs of financing projects.
“Ultimately, this could end up adding unnecessary costs onto renewable energy projects,” they said in a statement.
The introduction of the Clean Heat Market Mechanism which aims to scale-up the deployment of heat pumps is being delayed by a year.
The scheme would require heat pump installations to make up 4% of boiler manufacturer sales in the first year, increasing to 6% in the following year.
Manufacturers would earn tradable heat pump credits for each qualifying heat pump installed, with each required to reach a certain quota at the end of the trading period. The scheme’s implementation was initially scheduled for April 2024.
The Government said it remains fully focussed on supporting the development of a heat pump market of 600,000 installations per year by 2028, “ensuring that heat pumps become a mainstream consumer solution alongside gas boilers”.
Charles Wood, Deputy Director for Policy at Energy UK said the coming year should now be used to “kick-start the conversation with the public about all the options available to homes and businesses when it comes to low carbon technologies like heat pumps”.
Confidence among business leaders that Net Zero by 2050 is achievable has waned, according to a survey.
Consultancy Bain’s annual poll of executives across sectors including utilities and oil and gas found they predict a slower energy transition as they expect it will become more difficult to generate returns from green projects.
“Clearly, the longer that executives on the front lines of the energy transition grapple with the challenges of putting decarbonisation plans into action, the more sober they’re getting about the transition’s practical realities,” said Bain.
The report said macroeconomic headwinds such as high interest rates have made it that much harder to access capital needed to scale up transition projects and to attract enough customers to deliver a return.
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