Informer Issue 581 - 17/01/2023

An independent review into the UK’s Net Zero push has urged the Government to accelerate progress to reap the huge economic opportunities available. Former Energy Minister, Chris Skidmore’s ‘Mission Zero’ report draws on thousands of responses to a call for evidence and over 50 round table events with stakeholders. Its 129 recommendations cover areas including the greater role that business can be supported to play, making better use of infrastructure, and delivering more energy efficient homes. Skidmore said the UK should be proud of the global lead it has taken in tackling climate change, arguing it has “exceeded expectations so far in our race to Net Zero emissions by 2050”. “My recommendations are designed to make the most of this historic opportunity, covering the length and breadth of our economy, so that people in every part of the country can reap the benefits of this both in their communities, and in their pockets.” The recommendations include reviewing incentives for businesses to invest in decarbonisation, reforming the planning system to put Net Zero at its heart, delivering energy efficient homes and developing a cross-sectoral infrastructure strategy by 2025 to support the building and adaptation for new green energy sources such as hydrogen to support the green economy. Mike Childs, Head of Policy at Friends of the Earth, said the Government needs to “get on board” with the review’s findings if it expects to remain competitive internationally. “The Prime Minister must listen to the call for speedier and tougher action and turn up the dial on the UK failing climate efforts,” he said. Read more

Scaling up renewable production and delivering a fairer energy system are key priorities of Scotland’s new Energy Strategy. The document also says that, as things stand, domestic production of North Sea oil and gas is expected to effectively end within the next 20 years and the draft strategy is consulting on whether “we should act faster than this.” The strategy signals ambitious growth for renewables, hydrogen and CCS but reaffirms the Scottish Government’s position that it does “not want or need new nuclear power”. First Minister, Nicola Sturgeon, said the strategy would be transformational for the Scottish economy. “The imperative is clear. In this decade we must set Scotland on the path to an energy system that meets the challenge of becoming a net zero nation by 2045, that supplies safe, secure and affordable energy for all and that generates economic opportunity through a just transition,” she said. “The current energy crisis has demonstrated how vulnerable our energy system is to international price shocks, while laying bare the need for structural reform to ensure affordability for consumers.” However, Friends of the Earth Scotland said the strategy “misses an open goal by failing to dramatically ramp up action on energy efficiency and public transport”. Read more

A coal-powered facility at a power station in Nottinghamshire could stay open for two years longer than originally planned to help bolster security of supply. The unit at the Ratcliffe-on-Soar station had been due to close in 2022, but owner Uniper said it was now looking at keeping it open until the 2024 unabated coal phase-out deadline in the UK. A statement by the company said: “As requested by the Government, Uniper is now looking at whether we can make the unit available to run under standard market arrangements until the September 2024 coal phase out date. “We have prequalified the unit to take part in the capacity market T-1 auction for 2023/24. This means further investment to extend the life of the unit.” Uniper stressed there had been no change to the power station closure date. “Three of the units at Ratcliffe already have capacity market agreements in place and there has been no change to our commitment to operate these three units until the end of September 2024 when the power station will close in line with government policy,” it said. The coal unit was one of several which had been due to close last year but remained open to potentially help meet demand over winter. Read more

An electricity generator has agreed to pay £6.12m after admitting inadvertently to breaching a licence condition, which saw it secure excessive balancing mechanism payments. Drax Pumped Storage Limited will pay into Ofgem’s Voluntary Energy Redress Fund over the issue which occurred during periods of transmission constraint. Ofgem said Drax secured the payments between 1 January 2019 and 31 July 2022 by submitting excessively expensive bids to turn down its generation. Cathryn Scott, Director of Enforcement and Emerging Issues at Ofgem said: “This enforcement action sends a strong signal to all generators that they cannot obtain or seek to obtain excessive benefits during transmission constraint periods. If they do, we have the powers to intervene and we are ready to use them.” It said in the period since Ofgem raised the matter, Drax had fully cooperated with Ofgem.
“Drax has proactively sought to rectify the matter, including agreeing to make a payment to the redress fund and assuring Ofgem that it has implemented a new cost-based pricing methodology designed to reflect the costs and benefits to Drax of curtailing its generation,” it added. Read more

Investment in low carbon developments is set to see double-digit growth this year although will be slower than in previous years, according to forecasts. Research by Rystad Energy expects some $60 billion to be spent in 2023, 10% higher than 2022, with wind projects leading the way However, the growth in total spending is lower than recent years – which averaged 20% annual increases – as the report said “cost-conscious developers tighten their purse strings after two years of soaring prices”. Investments in green sectors surged 21% in 2022 to overtake related oil and gas spending for the first time. Onshore wind and solar and onshore wind will contribute the most in 2023 by a sizable margin. Spending on solar investments will total $250 billion this year, rising 6% over 2022. However, thanks to falling technology costs, capacity growth will be more. Audun Martinsen, Rystad Energy's Head of Supply Chain Research, said: “The weaker-than-expected growth is not a reason to panic for those in the low-carbon sector. Rampant inflation typically triggers fiscal restraint across industries, and spending will likely bounce back in the coming years.” Read more

BEIS has published a summary of the responses received to the consultation and related government decisions on a market-based mechanism for low carbon heat. More details here.

The Scottish Government is consulting on its newly published Energy Strategy and Just Transition plan. A consultation will run until 4 April. More details here.

The outcome of the Chris Skidmore’s independent review into Net Zero has been published by BEIS. More details here.

National Grid ESO has published a webinar recording after hosting events with industry stakeholders following the publication of its ‘GB Connections Reform - Case for Change’ report. View here.