Informer Issue 613 - 29/08/2023

Plans for a radical overhaul of the electricity market will ‘inevitably’ see bills rise according to industry bodies. The introduction of locational marginal pricing under the Review of Electricity Market Arrangements (REMA) to vary wholesale prices across GB would also damage investor confidence, the trade associations representing over 800 renewable energy companies argue. A report published by Cornwall Insight, commissioned by RenewableUK, Scottish Renewables and Solar Energy UK, has found that a different approach could achieve aims to reform electricity markets without risking the loss of billions of pounds of investment in cheap renewable energy. The report focuses on options to reform the CfD system to enable it to deliver even more benefits for billpayers. RenewableUK’s Economics and Markets Manager Michael Chesser said: “Injecting further volatility and uncertainty into our energy market would have very real and very negative consequences for billpayers. “We’re already working closely with the Government on a considered approach to reform our electricity market in a stable way, based on evolution rather than revolution, which won’t deter investors, so that we can secure lower prices for consumers and decarbonise our electricity system by 2035”. Read more

A new subsea electricity ‘superhighway’ between England and Scotland has been given the green light by planners. The Eastern Green Link 2 is a 2GW high voltage direct current (HVDC) subsea transmission cable from Peterhead in Scotland to Drax in England, being delivered between National Grid and SSEN Transmission. The cable will provide enough capacity to power more than two million homes if granted regulatory approval by Ofgem. Project director Sarah Sale said: “This renewable electricity superhighway is vital in supporting the UK’s transition to net zero and decarbonisation and we’re thrilled to be making such a significant contribution with the largest electricity transmission reinforcement project in the UK.” Construction is expected to begin in 2024, with a targeted operational date of 2029. Read more

A new national fund to help finance investment in net-zero industries is needed to prevent the UK falling behind in the global race to decarbonise, according to a think-tank. The IPPR think tank highlighted steps being taken elsewhere in the world including the US Inflation Reduction Act and the EU’s Green Deal Industrial Plan. Its proposed National Investment Fund (NIF) would provide equity finance to firms, supplying funding in return for becoming a part-owner of the business and sharing in its success and future profits, similar to the type of investment offered on the BBC’s Dragon’s Den. Initial funding to the NIF itself would be provided by the Treasury, but it would be further supported by tax revenues from North Sea gas and oil, or by levies which IPPR is urging be imposed on share dividends and ‘buybacks’ in the sector. Simone Gasperin, IPPR Associate Fellow, said: “The UK needs to finance and coordinate strategic industrial policy projects that will deliver a net zero transition through economic prosperity and inclusion. The cost of inaction on people’s livelihoods will be too high, while there are huge opportunities to be captured by the government co-investing with private companies.” Read more

Urgent investment is needed in more electricity transmission infrastructure across Scotland, according to an industry body. Scottish Renewables said more pylons, power lines and substations would cut energy bills, boost energy security and tackle climate change. In a report it points out the current network was designed for fossil fuels almost a century ago but is now holding back the clean power projects needed to modernise the UK’s energy supply. Nick Sharpe, Director of Communications and Strategy at Scottish Renewables, said: “While the deployment of cheap renewable energy generation has increased fourfold over the past ten years, investment in Britain’s transmission grid have flatlined, and has even decreased since 2017. “Electricity demand is set to increase by 50% in the next decade and double by mid-century so it’s therefore wrong to say that Scottish households don’t need more power lines, pylons and substations, we need them to keep our homes warm and ensure the lights stay on.” Read more

Ofgem has issued the first-ever fine issued in Great Britain under legal requirements to record and retain electronic communications relating to trading wholesale energy products. It has imposed the penalty of £5.41m on Morgan Stanley & Co. International plc (MSIP) for not recording and retaining electronic communications between January 2018 and March 2020. These communications were made by wholesale energy traders, on privately-owned phones via WhatsApp, which discussed energy market transactions. MSIP admitted the breaches, and has taken steps to ensure the breaches do not happen again, including enhanced staff training and the strengthening of its internal systems and controls. MSIP fully co-operated with Ofgem’s investigation and has agreed to settle the case. Cathryn Scott, Regulatory Director of Enforcement and Emerging Issues at Ofgem, said: “It is unacceptable that MSIP failed to prevent electronic communications which could not be recorded or retained. It risks a significant compromise of the integrity and transparency of wholesale energy markets. We welcome the steps MSIP has taken to ensure the breaches do not happen again.” Read more

Energy UK has published its response to a consultation on Strategy and Policy Statement for Energy Policy in GB.

Ofgem has published its decision on the proposal to end the temporary Last Resort Supply Payment claim process.

The Government has published its response to its call for evidence on a future policy framework for power with carbon capture, usage and storage (CCUS).

The Department for Energy Security and Net Zero has published the latest Digest of UK Energy Statistics (DUKES) annual statistics on traded energy, sales of electricity and gas by sector, and expenditure on energy by final user.

The Capacity Market prequalification submission window is now open. Participants can apply to bid for agreements to receive capacity payments based on the auction clearing price for the 2024/25 and 2027/28 delivery years by 5pm on 19 September.