Informer Issue 599 - 23/05/2023

Ofgem has set out a series of reforms aimed at speeding up the connection of low-carbon energy schemes to the transmission grid. In an open letter to the energy sector the regulator sets out potential options on short, medium and long-term reforms to make the connections regime “fit for net zero transition”. The review highlights the challenges with increasing application volumes constrained by the existing ‘first-come, first-served’ ‘queuing system’ to connect. Ofgem said the system sees new connection requests joining the end of the line, even if projects in front have stalled or are not progressing. It pointed out around 20% of generation capacity in the transmission queue will have to wait a further 10 years before reaching their connection dates. The regulator backs short-term initiatives by National Grid ESO and the Energy Networks Association to speed up connection dates and sets out the direction of travel for longer-term reforms to prioritise the schemes that are ready to go and ahead of those making poor progress. Akshay Kaul, Interim Director of Infrastructure and Security of Supply said: “There is a pressing need to ensure our energy system is equipped to enable this substantial increase in generation capacity and growing demand. “Many of the building blocks to address this are already coming into place. But more action will be needed. There must be a fit for the future connections regime which offers shorter average connection dates which better meet customers’ needs and enable a timely transition.” Read more

The UK and Japanese governments have pledged to work together to boost energy security including through development of more clean energy. The agreement came as Prime Minister Rishi Sunak also announced that Japanese companies are planning to invest £17.7 billion in the UK including in clean energy projects. The new investments include funding for offshore wind, low carbon hydrogen and other clean energy projects from Marubeni, parent company of SmartestEnergy. Marubeni has announced its intention to sign an MoU with the government which envisages approximately £10bn of investment in the UK with its partners over the next 10 years – including in offshore wind in Scotland and green hydrogen projects in Wales and Scotland. Sumitomo Corporation also intends to expand its UK offshore wind projects, leading to a total investment of £4bn in projects off the coasts of Suffolk and Norfolk alongside its partners. Prime Minister Rishi Sunak said: “These new investments are a massive vote of confidence in the UK’s dynamic economy, from some of Japan’s top firms. “Working with the Government and British industry they will create the kind of high-quality, reliable jobs and transformative local investment we are delivering around the country.” Masumi Kakinoki, CEO of Marubeni Corporation said: “We are thrilled to have forged a robust partnership with the United Kingdom, and we eagerly anticipate collaborating with the UK government to unleash a surge of investment into the nation’s clean energy transition. “This endeavour not only signifies our commitment to the UK’s energy transition, but also reinforces Marubeni’s role as an active participant in the global march towards a sustainable future. We are on the brink of an energy revolution, and it is partnerships like these that will help ensure our shared success.” Read more

Better co-operation between the UK and EU over issues like energy trading and carbon pricing could cut wholesale energy costs by hundreds of millions of pounds a year, according to a new report. Industry body Energy UK said Brexit, and the UK’s departure from the Internal Energy Market, had led to a patchwork of different arrangements for trading electricity and the return to a less efficient trading regime between GB and mainland European member states. Energy UK said that with the UK likely to become a net exporter of electricity in the future, the importance and benefit of more efficient trading arrangements and greater co-ordination with Europe will only increase. Energy UK’s Deputy Director, Adam Berman said: “Our analysis shows that increased energy and climate cooperation with the EU has the potential to deliver very substantial savings for households and businesses across the UK struggling with high energy bills. “We urge the UK and EU to press ahead with closer cooperation and engagement on issues such as energy trading and carbon pricing that have the potential to lower bills, reduce emissions, and bolster our energy security.” Read more

The National Audit Office (NAO) has expressed concerns over the Government’s £4.2bn innovation spending plans to achieve Net Zero. The NAO said more work is needed to strengthen governance and delivery mechanisms if it is to secure value for money for the budget. Its latest study scrutinises whether the government is set up to deliver value for money from its approach to investment in research and innovation to deliver net zero. Although it found that government had “made some important progress in recent years”, more needs to be done to ensure value for money. Gareth Davies, head of the NAO, said: “While the government is beginning to ask the right questions on how best to support innovation needed to achieve net zero, the lack of clarity regarding government responsibility for overseeing end-to-end progress is concerning. “The complexity of funding routes makes it tough to track spending and assess its efficacy. Moreover, the lack of clear definition of what success will look like and by when will make it difficult to assess whether the investment is on track." Read more

Three domestic energy suppliers have paid a total of £8m over issues with statutory compensation payments owed to customers. Regulator Ofgem said E.On Next, Good Energy and Octopus Energy either missed or unduly delayed the payments, which are due if a supplier does not provide a final bill within six weeks when a customer switches to another provider. Ofgem brought in additional 'Guaranteed Standards of Performance' (GSOP) to reduce delays in final billing in May 2020. Since their introduction, this is the first time the regulator has taken compliance action on GSOP compensation delays, in relation to final billing performance standards. In a separate announcement, Ofgem said customers are to receive refunds and compensation from two suppliers, Good Energy and OVO Energy. As part of its compliance work, Ofgem found that approximately 18,000 customers did not receive the protection they were due, as errors by the two suppliers saw them charged above the maximum rates allowed under either the energy price cap or the Energy Price Guarantee scheme. Read more

Ofgem has launched a policy review to speed up low-carbon energy schemes connecting to the electricity transmission grid. In an open letter to the energy sector it sets out potential options on short-, medium- and long-term reforms to make the connections regime fit for net zero transition.

The Government has published its response to the consultation outcome of a review of the energy intensive industries exemption scheme.

EnergyUK has published its response to Ofgem’s Consultation on the Future of Local Energy Institutions and Governance.

Ofgem has published guidance for generators on co-location of electricity storage facilities with renewable generation supported under the Renewables Obligation or Feed-in Tariff schemes.

The Department for Energy Security and Net Zero has launched a consultation consultation on its proposed Strategy and Policy Statement for energy policy in Great Britain. It closes on 2 August.