Informer Issue 530 - 21/09/2021

Business Secretary Kwasi Kwarteng has said there is "no question of the lights going out" this winter and has described warnings about energy shortages as alarmist His comments in the House of Commons came in a statement issued amid concerns over gas price rises and the failure of a number of smaller suppliers. “There will be no three-day working weeks or a throwback to the 1970s,” said Kwarteng, adding that speculation around power cuts was “unhelpful and completely misguided”. Kwarteng also stressed he would not be bailing out failed companies. "The current global situation may see more suppliers than usual exiting the market but this is not something that should be any cause for alarm or panic," he said. "The taxpayer should not be expected to prop up companies which have poor business models and are not resilient to fluctuations in price." The Government has been holding a series of high-level discussions in recent days with leaders from the energy industry over the rising cost of gas caused by surging demand as economies re-open. Over the next few days it plans to set out proposals for protecting consumers, businesses and suppliers from the global prices rises. Suren Thiru, Head of Economics at the British Chambers of Commerce, said the energy price crisis risks aggravating an already severe supply chain issue for businesses. "The government must do all it can to safeguard security of supply and ensure that customers and suppliers have access to the support they need to weather this difficult period,” he said. Read more

A fire at a major subsea power link between the UK and France has added to concerns about energy supply margins ahead of winter. National Grid’s IFA1 interconnector site in Kent had to be evacuated after last week’s blaze. It said the issue with the link, a joint venture with France’s RTE, means that 1GW is unavailable until 13 October. This is in addition to the 1GW that was unavailable due to a planned outage. National Grid said it was “completely focused on getting IFA safely returned to service as soon as possible” and was in discussions to ensure it optimises upcoming planned pre-winter outages of other interconnectors to support UK security of supply. Phil Hewitt, Director of consultancy EnAppSys, described the issue as a major event given the backdrop of a forecast of tight margins ahead. “We could be looking at an extended outage. In the long run, we will lose 2GW of import to the GB markets whilst we are struggling at the moment with low margins. “With margins tight anyway for this winter, it puts the GB market in a risky position for the winter and especially if we suffer from periods of low wind and cold temperatures.” Union leader Sue Ferns of Prospect said the issue “highlights the need to get moving on building new nuclear”. “With the current fleet of nuclear coming off line in the next few years we are already facing a potential energy gap, and that will only be made worse without electricity via this interconnector. “What is clear is that as we attempt to achieve net zero there is a risk we become ever more dependent on energy from overseas instead of generating it ourselves.” Read more

Growth of EVs in the years ahead could see electricity demand rise by 25% by 2040, according to new forecasts. Analysis by Cornwall Insight found that a rapid rise in EV take-up could see power demand from the transport sector increase by 31 times by 2040 from current levels. Its benchmark power curve report said that EVs will add an additional 71.6TWh of demand by 2040, a 25% increase on current annual demand. However, the report also highlighted the additional flexibility that EVs will bring to the system. Senior Modeller Tom Edwards said: “EVs are widely seen as crucial in reducing emissions to meet net-zero. However, the magnitude of the impact that the technology will have on the electricity system should not be underestimated. If EVs increase according to the National Grid’s Future Energy Scenarios (FES) Leading the Way scenario, the increase in demand for electricity will be substantial. “However, EVs have the potential to offer the system considerable flexible vehicle-to-grid (V2G) discharging and smart charging, which reduces the level of investment needed in flexible power supply.” Read more

Former trade minister Greg Hands has been appointed to oversee the Government’s energy and climate portfolio as part of Prime Minister Boris Johnson’s latest cabinet reshuffle. Hands, MP for Chelsea and Fulham, replaces Anne-Marie Trevelyan who has been appointed Secretary of State for International Trade. Hands reacted to his appointment on Twitter saying: “Energy, clean growth and climate change - some of the biggest challenges and opportunities for the Government as we approach #COP26.” Kwasi Kwarteng remains in his role as Secretary of State at the Department of Business, Energy and Industrial Strategy, which he was appointed to in January. Kwarteng said he was delighted to be continuing in his role as the UK steps up its efforts to “supercharge R&D, decarbonise our economy, catalyse private capital to create new jobs in new industries and revive Britain’s spirit of enterprise”. Read more

MPs have called for transmission charges and grid investment to be equally shared across the UK to help strengthen the Scottish renewables sector. The Scottish Affairs Committee voiced concerns that some renewable projects in England and Wales have a competitive advantage as they are paid to connect to the grid, whereas Scottish projects must pay to connect to the grid. The committee also said the short-term nature of transmission charges which vary year on year “impacts business cases and does little to instil confidence for long-term investment decisions”. Committee Chair, Pete Wishart, said: “In 2019, over 97% of electricity consumed in Scotland was from renewable energy sources. It is a great success, but more can be done to decarbonise the grid. “The bold net zero commitments by both the Scottish and UK Governments are welcome, but delivery is essential. To meet net zero, the Scottish and UK Government must work together to champion the opportunities Scotland offers, and to work with Ofgem and industry to modernise the grid for our low carbon aspirations and tackle climate change.” Claire Mack, Chief Executive of Scottish Renewables, welcome the call for a review into the imbalance of transmission network charging. “We urge the UK Government to take this recommendation and make this a top priority to enable the delivery of our climate change targets." Read more