Posted on: 06/02/2024
This week's headlines: The regulator is to investigate claims that some wind farms benefitted by overestimating output; Targets for the upcoming Capacity Market auctions have been confirmed; A survey finds only 4% of smaller firms are measuring their carbon emissions; Our industry round-up includes the latest updates from Government departments and energy regulators.
Ofgem has published the Renewables Obligation Buy-out Price, Mutualisation Threshold and Mutualisation Ceilings for 2024-2025.
Ofgem has launched a consultation on its proposed approach to implementing the energy industry code governance reforms set out in the Energy Act 2023. The proposed reforms will mean that the codes can be changed more quickly and respond to changes in the energy market.
The Department for Energy Security and Net Zero has launched a consultation to look at how can support investment in advanced nuclear technologies and enable high value projects to be taken forward.
Energy UK has published its response to a consultation on a new threshold for businesses accessing the Energy Ombudsman.
The Department for Energy Security and Net Zero and Ofgem have published a joint consultation on new electricity supply and generation licence conditions to support implementation of new ownership arrangements for Elexon. The consultation closes on 21 February.
Energy regulator Ofgem is investigating claims that wind farms may have overestimated their output.
A report by Bloomberg found that 40 out of 121 studied projects overestimated their output by an average of 10% and that the figure was at least 20% at 27 wind farms.
The report said the inflated forecasts of generation from 2018 to June 2023 may have added around £51m in increased constraint costs paid to generators to prevent the grid being overloaded.
Ofgem said it will work closely with the ESO to look into the issue and said enforcement action could be taken if “egregious action or market abuse” is found.
“We will continue to work to protect market integrity and the best interests of consumers, as demonstrated by the recent cases we have concluded against generators who charged excessive prices behind transmission constraints,” it said.
Increased targets for the next Capacity Market auctions have been confirmed by the Government.
The Department for Energy Security and Net Zero accepted recommendations by the system operator to raise the year-ahead T-1 auction target by 0.3GW to 7.7GW for the 2024/25 auction.
The four-year ahead T-4 target is increased by 0.5GW, taking the capacity target for the 2027/28 auction to 45GW.
In a letter from Energy Secretary Claire Coutinho to National Grid ESO, she said she was accepting the system operator’s recommendation to raise the targets to account for “technical considerations”.
The T-1 auction is due to start on 20 February followed by the T-4 auction on 27 February.
Most SMEs are failing to accurately measure carbon emissions, according to a new report. The report from YPO, a global leadership community of chief executives, found that just 4% of its members surveyed were able to provide data on their companies’ direct and indirect emissions.
Only 5% measured the level of their businesses’ renewable energy use, so they were not able to report progress on their energy transition.
Orlan Boston, YPO member and Senior Advisory and Global Client Service Partner at EY, said: “As well as more regulatory requirements, customer pressure on companies to provide environmental, social and governance performance transparency and make progress against it is intensifying.
“Small and medium-business leaders should evaluate the opportunities and risks for their own individual businesses and stakeholders, which will enable them to execute a targeted strategy of improvement.”
The system operator has awarded early-start contracts to manage constraints in a move it said would help deliver savings for consumers.
National Grid ESO said the interim Constraint Management Intertrip Service (CMIS) for the East Anglia area has been awarded to three generating companies with a total of 10 units, starting in February 2024 and will continue until the enduring service begins next year.
The service was first launched across the Anglo-Scottish boundary last year, and in its first year it enabled 367GWh of extra renewable electricity generation, saving £95.2m in costs which are ultimately borne by end consumers.
The East Anglia service is expected to generate in the region of £20m of extra consumer savings. This new service will enable the ESO’s control room more flexibility by allowing renewable generation to remain on the system, rather than being pre-emptively curtailed.
Julian Leslie, Director of Strategic Energy Planning and Chief Engineer at the ESO, said: “As part of our wide-ranging five-point plan to manage system constraints this service, alongside other workstreams, will be key to reducing balancing costs and ultimately saving consumers millions of pounds.”
The United Nation’s climate chief has said an “Olympian’ effort is needed ahead of COP29 to put the world on track for targets to limit emissions.
Simon Stiell urged the world’s wealthiest economies, including the UK, to update their climate strategies without “PR spin, rebranding or tinkering around the edges”.
“The action we take in the next two years will shape how much climate-driven destruction we can avoid over the next two decades, and far beyond,” said Stiell.
He made his comments in a speech in Baju, Azerbaijan, which will host the UN’s annual global climate summit, COP29, this November.
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