Informer Issue 488 - 17/11/2020

Ofgem has confirmed that mutualisation of the Renewables Obligation (RO) has been triggered for the third year running.

The announcement came after it was revealed earlier this month that there was a £105m shortfall in the Renewables Obligation buy-out fund for 2019-20 after 33 suppliers failed to pay the full amount due by the latest deadline.

In an update, Ofgem said it is now “completing our calculations and internal checks on late payments received and payments to be redistributed”. Further details, including the total shortfall, will be published at the beginning of December.

Tim Dixon, Wholesale Team Lead at Cornwall Insight, said: "Unfortunately, this means that other suppliers will be picking up the costs of exited rivals across 2021 and 2022, which will ultimately be passed on to the consumers' bill."

"While Ofgem will not confirm the total shortfall until early December, it seems unlikely that we will see a shortfall as large as the levels seen in 2017-18 and 2018-19. But the legacy of any defaulted payments will endure."

Where suppliers do not present a sufficient number of Renewables Obligation Certificates, they must pay into a buy-out fund used to cover the administration costs of the scheme.

Mutualisation is triggered in the event of a shortfall, meaning that the remaining costs are distributed across the industry’s other suppliers.

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Plans for a multi-billion pound underwater super-highway to transport renewable electricity from Scotland to England have been unveiled.

National Grid said the project would help the North Sea become the “hidden power house of Europe” and would support hundreds of green jobs throughout construction and operation.

Together with SSE and Scottish Power it has committed to the first stage of work including subsea surveys. The project, expected to bring in investment of over £3bn would see the installation of the world’s longest subsea HVDC cables with a combined capacity of up to 4GW.

It will enable enough electricity for around 4.5 million homes to travel up to 440km from Peterhead and Torness in the east of Scotland, a hub for offshore renewables, down to Selby and Hawthorn Point in the north-east of England.

National Grid UK executive director Nicola Shaw said: “This project will help transport enough renewable electricity for around 4.5 million homes across the UK and will become part of the backbone of the UK’s energy system."

“It’s a great example of companies working together on impressive engineering feats that will help the country hit its net zero carbon target by 2050.”

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Renewables are set to become the world’s largest source of electricity generation by 2025, ending coal’s five decades at the top of the power mix.

By then, renewables should supply a third of global electricity according to a report by the International Energy Agency (IEA).

It also found renewable power is growing robustly around the world this year, contrasting with the sharp declines triggered by the Covid-19 crisis in many other parts of the energy sector such as oil, gas and coal.

New additions of renewable power capacity worldwide will increase to a record level of almost 200 gigawatts this year.

Dr Fatih Birol, the IEA’s Executive Director, said: “The resilience and positive prospects of the sector are clearly reflected by continued strong appetite from investors – and the future looks even brighter with new capacity additions on course to set fresh records this year and next.”

Meanwhile, the latest BEIS Public Attitudes Tracker found that almost 80% of people in the UK support the use of renewable energy.

Backing is strongest for solar power at 85%, while 79% support wave and tidal power. Offshore and onshore wind energy had the approval of 77% and 73% of respondents.

Melanie Onn, Deputy Chief executive of RenewableUK, said: “The sky-high level of public support in this latest poll chimes with the Prime Minister’s announcement that he wants every UK home to be powered by offshore wind by 2030."

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Japan’s Marubeni Corporation, parent firm of SmartestEnergy, has joined forces with SSE Renewables and investor Copenhagen Infrastructure Partners (CIP) to work together on joint bids for future offshore wind projects in Scotland.

The 10GW ScotWind offshore wind leasing process, managed by Crown Estate Scotland, is the first in Scottish waters for a decade.

Marubeni is currently leading a consortium to build Japan’s first commercial scale offshore wind projects at Akita Port and Noshiro Port in Akita Prefecture. It is also participating in two floating offshore wind demonstration projects in Japan.

Marubeni Offshore Wind Development Corporation President and Chief Executive Hisafumi Manabe said: “The global expertise that Marubeni and CIP bring to the table is important not only in fixed foundation offshore wind deployment but also in the development of critical new floating technology."

“We believe that ScotWind will play a pivotal role in delivering the new Scottish offshore wind target of 11GW by 2030 on the pathway to net zero bringing a wealth of economic benefits along the way.”

SSE Renewables director of capital projects Paul Cooley said: “We are excited to bring together the combined strengths of each of the partner organisations."

“We will seek to maximise the opportunities that are available to the local supply chain to take part in these future projects and will continue to actively engage through the Scottish supply chain clusters.”

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The potential to use huge power satellites to collect solar energy and beam it back to the grid is to be explored in a new study backed by the UK Government.

The idea - first imagined by science-fiction writer Isaac Asimov in 1941 - is now being studied by several nations because of advances in lightweight solar panels and wireless power transmission technology.

The study, led by Frazer-Nash Consultancy, will look at whether a space system could deliver affordable energy for consumers, and the engineering and technology that would be required to build it.

One of the biggest issues to overcome is assembling the massive satellites in orbit, which has not been done before at this scale.

Dr Graham Turnock, Chief Executive of the UK Space Agency, said: “The sun never sets in space, so a space solar power system could supply renewable energy to anywhere on the planet, day or night, rain or shine. It is an idea that has existed for decades, but has always felt decades away. Historically, the cost of rocket launches and the weight that would be required for a project of this scale made the idea of space-based solar power unfeasible. But the emergence of privately-led space ventures has brought the cost of launch down dramatically in the last decade.”

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