Posted on: 16/04/2024
This week's energy news headlines: Lower balancing costs are expected this summer according to the system operator; Energy users are forecast to benefit from lower prices in the years ahead; Smaller generators will be able to access payments for helping restore the electricity system. Our industry round-up includes the latest updates from Government departments and energy regulators.
National Grid ESO has published its latest Summer Outlook report giving its views on the electricity system this summer.
The Department for Energy Security and Net Zero is seeking views on proposals to support Capacity Market auction liquidity.
The latest monthly data on the UK’s renewables sector, including capacity, electricity generation and liquid biofuels consumption has been published.
Ofgem has launched a consultation on the temporary facilitative licence condition to support the implementation of the Independent System Operator and Planner. The period is open until 10 May.
Ofgem has published its final Forward Work Programme for 2024/25.
The Department for Energy Security and Net Zero is seeking views on two licences covering gas and electricity functions of the National Energy System Operator, and providing response to previous consultations.
Balancing costs are expected to fall by around £100m this summer, according to the latest forecast from the system operator.
Although National Grid ESO said it anticipates an increase in the volume of balancing actions, the cost will be offset by a combination of falling wholesale prices and savings measures.
In its latest Summer Outlook report the ESO also said it has no concerns about supply in the months ahead although the UK is expected to see net power imports from the continent.
Kayte O’Neill, the ESO’s Chief Operating Officer, said “energy markets show signs of finding a new equilibrium” for this summer.
“Wholesale prices have fallen significantly, reflecting high scheduled French nuclear availability, and robust European gas storage. While volatility in the energy markets shows signs of subsiding, the electricity system continues to change at pace,” she said.
The ESO said expects to publish an early view of its outlook for winter 2024/25 in June, with the Winter Outlook report expected to be published by late September.
New projections suggest the recent drop in power prices could extend to the end of the decade. Cornwall Insight said the latest data from its Q1 Power Curve report shows a “striking decline in projected prices” which it said bodes well for both households and businesses.
Fuelled by high gas stocks in Europe and a mild winter, gas prices dropped from an average £94 per MWh in 2023-2024 to around £79 per MWh at the end of March. The forecasts for the next two years show a substantial reduction compared to the previous report released in late 2023.
It said prices through 2027 are anticipated to remain largely level before falling from 2028, as gas prices reduce due to increased LNG supply and higher marginal cost fossil fuel technologies being replaced by new renewables.
Tom Edwards, Senior Modeller at Cornwall Insight: “Fuelled by ample gas stocks and a mild winter, gas prices are falling. Our forecasts show these lower costs are not just a temporary blip but are part of a sustained shift towards energy affordability.”
However Edwards said prices remain above historic averages, something which is expected to continue beyond the end of the decade.
Smaller distribution-connected generators will be able to benefit from payments if restoration services are needed after a shutdown of the electricity system.
Elexon has implemented a change to the Balancing and Settlement Code to enable smaller generators to contribute to the system restoration services needed in the rare event that there is a partial or total shutdown of the electricity system.
The services have traditionally been provided by transmission connected generators such as thermal plant.
Non-BSC parties can now submit claims for payments for restoration services if they negotiate a restoration contract with NGESO. These non-BSC Parties could include windfarms, solar farms and battery energy storage systems and they are expected to compete for restoration contracts from 2025.
Elexon said the move should enhance security of supply as the system operator will have a wider range of providers to choose from when tendering for restoration contractors.
Removing barriers to onshore wind and solar power could produce 13 times more electricity than current levels in England, according to new research.
Friends of the Earth said it had identified 219,800 hectares of land considered most suitable for new onshore wind developments and 295,000 hectares with potential for new solar sites, some of which can be utilised for both while also protecting nature and important landscapes.
The research found that if all the land identified were developed for onshore solar or wind, 2.5 times more electricity than currently required to power all households in England could be produced. Given the UK also has huge offshore renewable resources and potential for other clean energy sources such as rooftop solar, it said not all the land identified would be required to help boost the country’s renewable energy output.
Tony Bosworth, climate campaigner at Friends of the Earth, said: “We urgently need our political leaders to pull their heads out of the sand and produce a strong, ambitious and fair new climate plan that lifts the barriers to onshore wind and solar power and secures investment in the infrastructure needed to support the switch to renewables.”
Energy minister Graham Stuart has stood down from the Government.
Stuart, who has been a minister for more than eight years, said although much had been achieved in driving the energy transition he wanted to focus on local issues.
He has been replaced by Justin Tomlinson, a former minister and deputy Tory chairman.
In his resignation letter to Prime Minister Rishi Sunak, Stuart said: "I'm proud of all we have achieved as a Government, not least being the first major economy to halve CO2 emissions.
"Domestically I was delighted to establish and chair the Net Zero Council, the Solar Taskforce and the Green Jobs Delivery Group as we continue our partnership with business to reach net zero in a way which strengthens our economy and protects households. The Review of Electricity Market Arrangements has refined our options to drive the transition at lowest cost."
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