Informer Issue 615 - 12/09/2023

Industry leaders have reiterated calls for a reform of the CfD system after the latest auction of clean power contracts failed to secure any new offshore wind.

The 5th round of the scheme secured 3.7GW of new renewable capacity, the lowest level since 2017 and just over a third of the 10.8GW in last year’s auction.

The total included 1.9GW of solar at £47/MWh, 1.5GW of onshore wind at £52.29/MWh, and 53MW of tidal power at £198/MWh.

Only 27GW has so far been secured of the Government’s 50GW offshore wind target for 2030 and future auctions will now have to support 4.5-5.8GW a year to get back on target.

Richard Sandford, Co-Chair of the Offshore Wind Industry Council, said although the results were disappointing, the industry was focused on working with the Government to reform the auction process so that we can secure far more capacity next year and beyond.

“It’s clear that this year’s auction represents a missed opportunity to strengthen Britain’s energy security and provide low-cost power for consumers.”

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The Government has eased an effective ban on new onshore wind farms in England to see off a threatened rebellion by Conservative MPs.

Changes to planning rules are aimed at making it easier and quicker for onshore wind farms to be built.

A group of 25 Tory MPs, including former COP26 president Sir Alok Sharma, had been leading calls for the move through an amendment to the Energy Bill.

However, RenewableUK warned the changes won’t go far enough.

"We will still face a planning system stacked against onshore wind that treats it differently to every other energy source or infrastructure project. A lot will be open to interpretation and there are still hurdles to navigate which remain in place,” said Head of Onshore Wind James Robottom.

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National Grid plans to unlock 10GW of grid capacity for the connection of renewable energy assets including solar farms, onshore wind, and battery storage projects.

Through a new agreement with the ESO, projects that require additional transmission network reinforcement will be offered the chance to connect now.

In return for an earlier connection, the interim arrangements would mean some projects could be curtailed when there is too much generation on the system, such as on some of the windiest and sunniest summer days. Longer term however, these interim arrangements will be replaced with firm connections as network capacity increases.

From October the current “first come, first served” connection model is also being replaced with a more dynamic “first ready, first connected” approach.

Cordi O’Hara, President of National Grid Electricity Distribution said: “Making it quicker and easier for our customers to connect to the network is a priority for us. With the volume of new connection applications soaring as the UK moves at pace to deliver Net Zero, we know a ‘fit for the future’ connections process will be vital to meet current and future demand.

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An ambitious path to achieving Net Zero could reap huge rewards for areas of the country most in need of an economic boost, according to a report.

Energy UK’s Community Capital report produced with Oxford Economics shows that the South-West and West Midlands – both areas that currently have a GDP per head below the national average – could be the biggest beneficiaries from the most rapid transition to Net Zero, thanks to the specialism of their manufacturing sectors.

Under the most ambitious scenario, the GDP of each area of the UK would be 5.4%-7.5% greater in 2050 than under the current trajectory – which would amount to a boost of £141 billion for regions outside London and the South-East.

Areas with concentrations of carbon-intensive industries and proximity to depleted oil and gas fields, such as the North-East of England and Scotland as well as South Wales, are also well placed to lead the way in carbon capture and hydrogen projects.

Dhara Vyas, Energy UK’s Deputy Chief Executive said investment in clean energy can bring economic growth to areas away from London and the South-East.

“Those benefits can reach all corners of the country if we commit fully to the energy transition – especially areas whose traditional industrial and manufacturing bases have declined but also make them well-equipped to lead the way in this next clean industrial revolution.”

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A rapid expansion of renewable energy is needed as part of a massive scale-up of efforts to cut emissions, according to the UN.

Although progress has been made since the signing of the Paris Agreement in 2015, the world is not on track to achieve the goals set.

The UN has been reviewing progress made against the pledges ahead of global climate talks in Dubai later this year.

The report stresses that fossil fuels that don't capture the carbon they produce now have no future.

Simon Stiell, Executive Secretary of UN Climate Change, said: "I urge governments to carefully study the findings of the report and ultimately understand what it means for them and the ambitious action they must take next.”

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The Department for Energy Security and Net Zero has published the outcome of its consultation on introducing non-price factors into the Contracts for Difference scheme.

Energy UK has published the latest report in The Clean Growth Gap series which explores how different regions of the UK could benefit from the energy transition by building on existing strengths.

The Government has named Mark McAllister as its preferred candidate to be the next Chair of Ofgem. He is currently chair of the Office for Nuclear Regulation Ofgem has issued a consultation on supply and generation licence conditions to implement new ownership arrangements for Elexon.

The Capacity Market prequalification submission window is 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.