Informer Issue 502 - 02/03/2021

A return to colder weather this week has prompted system operator National Grid ESO to forecast tight margins on the grid again.

After a spell of warmer weather in recent days, forecasters have said they expect temperatures to fall back to as low as -5C in some parts of the country by the end of the week and for the cold snap to last into next week.

The system operator said it was expecting tight margins from today onwards owing to a combination of weather-related factors and unavailability of power sources over periods with higher demand.

“This combination of factors means the forecast cushion of spare capacity we operate the system with has been reduced,” it said in an update via Twitter.

“We’re exploring measures and actions to make sure there’s enough generation available to increase our buffer of capacity.”

Recent months have seen National Grid ESO issue a number of Electricity Margin Notices although it has stressed these are routine signals to the market that it would like a larger cushion of spare capacity and they don’t mean that electricity supply is at risk.

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The first auction of carbon allowances under the UK's new emissions trading scheme (ETS) is set to be held in May.

The scheme has been set up following Brexit and UK’s withdrawal from the European carbon market.

It will set a cap on greenhouse gases that can be emitted by energy-intensive industries.

UK Energy Minister Anne-Marie Trevelyan said the publication of the UK ETS auction calendar was “another crucial step towards our target of eliminating our contribution to climate change by 2050”.

“Our scheme is even more ambitious than the EU system it replaces and the publication will give businesses and operators clarity over this year’s supply of emissions allowances, enabling them to plan ahead, build back greener and better prepare for the transition to a low-carbon economy”.

Emissions trading schemes work on the ‘cap and trade’ principle, where a cap is set on the total amount of certain greenhouse gases that can be emitted by sectors covered by the scheme.

Within this cap, participants receive free allowances and can buy emission allowances at auction or on the secondary market.

The UK ETS will have a transitional auction reserve price of £22 per tonne, which establishes a minimum price for which allowances can be sold.

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Approval of a change which will enable individual asset meters located ‘behind the boundary point’ to be used for settlement purposes has been hailed as a ground-breaking move for the energy system.

Ofgem has given approval to modification P375 to the Balancing and Settlement Code (BSC) which will allow individual asset meters located ‘behind the boundary point’ to be used for Settlement purposes.

Such meters can record electricity flows to or from assets including those owned by embedded generators, demand-side response (DSR) providers, or owners of electric vehicle charging points.

Elexon, which manages the BSC, described the move as a “ground-breaking change” to support net zero.

Currently data from meters behind the boundary point is not recognised in settlement as only data on electricity flows from the boundary point - at which complex, multi-use sites connect to a distribution network - can be used.

Mark Bygraves, Elexon’s Chief Executive, said: “Currently we do not have much visibility of the actions of smaller asset owners such as storage, and renewable generation at multi-use sites. The introduction of P375 to the BSC Settlement arrangements will change that, as fitting individual Asset Meters to these units will provide detailed information on their activity."

“It is good news that Ofgem has approved this ground-breaking change as we believe it is an important step forward for the energy transition and progress to net zero. Recognising the role smaller assets can play in keeping the system in balance can improve the business case for building such assets, and give further support to innovators.”

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More than a million domestic customers were overcharged a total of more than £7.2 million by their energy suppliers after they failed to adhere to Ofgem’s price protection rules.

The rules protect a customer’s tariff price when they decide to either switch suppliers or tariffs after a price increase.

Ofgem said most of the failures were down to suppliers not having adequate arrangements in place to make sure the protections were applied in full when customers decided to switch.

The suppliers have since agreed to refund all affected customers, and in some cases make goodwill payments, totalling £10.4m. Where it has not been possible to process refunds, the suppliers have agreed to make payments to the energy redress fund.

Several of the suppliers self-reported the issue to Ofgem. All suppliers were then requested to self-assess their practices, which the non-compliance between 2013-2020.

Anna Rossington, Interim Director of Retail at Ofgem said: “Customers should have confidence in switching and not be overcharged when doing so. This case sends a strong message to all suppliers that Ofgem will intervene where customers are overcharged and ensure that no supplier benefits from non-compliance.

“It also shows that, where appropriate, Ofgem is prepared to work with suppliers who have failed to comply with the rules, but who are willing to self-report issues and put things right for their customers.”

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A number of barriers need to be removed for the renewables industry to be able to play a full role in helping achieve net zero, according to a report.

The Association for Renewable Energy and Clean Technology (REA) has unveiled a ‘green recovery pathway’ outlining the measures that need to be taken to deliver net zero and support the UK’s economic recovery.

Key targets include that by the end of 2022, more than 50% of electricity generation will be provided by renewables, rising to 100% by 2032.

The majority of energy demand for the heat and transport sectors could be met from renewable and clean technologies by 2035 and 200,000 new jobs could be created in the renewable energy and clean technology sector by the same time.

The REA’s CEO, Dr Nina Skorupska said change required over the next three decades “is on a par to that experienced during the industrial revolution”.

“With COP26 on the horizon, the government has an opportunity to make a bold statement – this strategy not only sets out several necessary and achievable targets, but it also provides the solutions to removing the barriers which could prevent those targets being met."

“It is now abundantly clear that the argument of an ‘either/or’ choice between tackling climate change and providing an economic boost is over. Support for the renewable energy and clean technology sector will not only help the government reach its net zero ambitions, but it could deliver hundreds of thousands of new jobs and return billions of pounds worth of investment too.”

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