Posted on: 21/11/2023
This week's energy news headlines: The renewables industry has welcomed the raising of strike prices for the next CfD round; MPs warn a lack of long-term thinking by the Government is putting Net Zero at risk; Ofgem announces regional energy planners will be appointed to accelerate the transition; Our industry round-up includes the latest updates from Government departments and energy regulators.
Industry leaders have welcomed a raising of strike prices for the next CfD round to attract more investment in renewables.
The Government said it was upping the maximum price offshore wind and other projects can receive following a review of factors including the impact of global events on supply chains.
The maximum strike price has been increased by 66% for offshore wind projects, from £44/MWh to £73/MWh, and by 52% for floating offshore wind projects, from £116/MWh to £176/MWh ahead of Allocation Round 6 (AR6) next year. Geothermal increased by 32% from £119/MWh to £157/MWh, solar by 30% from £47/MWh to £61/MWh tidal by 29% from £202/MWh to £261/MWh.
The Government said the move will ensure projects are “sustainably priced and economically viable” to compete in the auction.
RenewableUK's Chief Executive Dan McGrail said: "There is the potential for the Government to attract a record level of private investment in offshore wind projects next year, with at least ten projects likely to be eligible, able to power 8.5m homes each year and reduce the UK’s need for gas by 39%. The framework they’ve set out is a significant step forward in securing this.”
Ofgem is to create regional energy planning roles across Great Britain to help speed up the transition to net zero.
The Regional Energy Strategic Planners (RESPs) will work with organisations at a local level including local government and gas and electricity networks, to improve understanding of the infrastructure needed in different parts of the country and attract investment for projects.
The planners will create clear plans for how local energy systems need to be developed to reach net zero, considering both the national targets set by government, and the local needs and most appropriate approach in each area.
Ofgem’s Chief Executive Jonathan Brearley said: “The creation of the Future System Operator (FSO) gives us a once in a generation opportunity to design the energy system we need to get us to net zero. We’re already working on future energy network planning on a national level and creating Regional Energy Strategic Planners (RESPs) means this can also now happen at a regional level.”
A lack of long-term planning from the Government is putting Net Zero targets at risk, a report has warned.
The Public Accounts Committee (PAC) says that too often the Government’s plans for supporting the progression of technologies needed to reach the target are short-term. The PAC’s inquiry also identified a lack of clarity and support from government for both businesses and consumers.
The Government is dependent on businesses on the ‘supply’ side delivering successful innovation to reach net zero, but the report finds that businesses are finding sources of public sector funding difficult to navigate and access. On the ‘demand’ side, the report warns that developing new technology may be taking priority over focusing on the practical challenges consumers might face in taking them up.
Dame Meg Hillier MP, Chair of the Committee, said: “If the Government continues to leave businesses to peer through a haze of uncertainty, then that investment will not be forthcoming. Businesses and consumers need certainty.”
The UK has slipped down the league table of most attractive countries for renewable energy investment.
The fall of three places to seventh in EY’s Renewable Energy Country Attractiveness Index (RECAI) was partly blamed on the fact no bids for new offshore wind projects were received in the latest CfD round.
EY also said “the diminishing of green policies has left investors with reduced confidence in UK renewables”.
The UK now ranks behind the US, Germany, China, France, Australia and India for investment.
Ben Warren, EY Renewables Corporate Finance and RECAI Chief Editor, commented: “The UK’s recent challenges in the offshore wind sector echo a broader, global struggle. When auctioning contracts for offshore wind generation, governments need to reflect economic conditions in the design of the auction.
“Considering moving away from cost-only auction formats and incorporating non-price factors, such as environmental considerations and job creation, may entice developer interest and a rise in bids.”
MPs have urged the Government to publish a nuclear roadmap this year and to back Wylfa in North Wales as the site for a new project by the end of the current parliament.
The All-Party Parliamentary Group on Nuclear Energy report also recommends the UK emulate the pathway adopted by other countries, such as France and South Korea, with the latter going from zero nuclear capacity in the 1970s to 24 GW today.
It also believes that Great British Nuclear (GBN) should set contract conditions that require the use of British supply chains, so even foreign SMR designs are effectively made by British industry, helping to “breathe new life” into Britain’s industrial heartlands and creating high-quality jobs.
Ian Liddell-Grainger MP, chair of the APPG, said: “Ramping up nuclear capacity to the levels needed for energy security and net zero will require a monumental effort from Government and industry. The steps outlined in this report shows how the UK can deliver on its commitment to nuclear and ensure we don’t fall behind the progress being made by other countries.
“We must seize this opportunity so we can deliver on clean power, energy security and good, green jobs for our country.”
The Department for Energy Security and Net Zero is seeking views on proposals for an extension to the current Climate Change Agreement scheme, and on further proposals resulting from the earlier consultation.
The Department for Energy Security and Net Zero has published its latest report on levelised cost estimates for electricity generation technologies, detailing methodology, data and assumptions.
Ofgem has published details of the Renewables Obligation Quarter 1 Mutualisation Payment Distribution 2021-22.
Ofgem has launched a review into standing charges on energy bills. It is looking for responses by 19 January.
The Department for Energy Security and Net Zero has published updated guidance on the operation of the UK ETS markets and how to take part in auctions and in trading on the secondary market.
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