Posted on: 03/09/2024
This week's energy news headlines: 131 projects secure backing in the latest CfD auction round; The regulator decides not to intervene on power market liquidity; Trials of consumer flexibility have highlighted its potential for the grid. Our industry round-up includes the latest updates from Government departments and energy regulators.
The Secretary of State for Energy and Net Zero and Chris Stark have written to Fintan Slye, Director of the Electricity System Operator, requesting expert analysis of the location and type of new investment and infrastructure needed to deliver on 2030 clean power targets.
Ofgem has published a summary of responses following call for input on power market liquidity.
The Government has published the outcome of a consultation on the two licences intended for the National Energy System Operator (NESO), as well as amendments to other impacted licenses.
The latest statistics on Energy Trends in the UK covering balances of energy supply and demand have been published.
Ofgem has closed an investigation into Drax Power Limited which is making a £25m payment to the Energy Industry Voluntary Redress Fund
A record number of renewable energy projects have secured funding under the Contracts for Difference support scheme.
The sixth auction under the scheme will support 131 projects powering the equivalent of 11 million homes.
After the previous auction round in 2023 saw zero offshore wind projects agreed, the latest round has seen 9 contracts awarded including securing both what will be Europe’s largest and second largest windfarm projects, Hornsea 3 and Hornsea 4 off the Yorkshire coast.
Energy Secretary Ed Miliband said: “These results show that together, this government and the energy industry are securing investment into our country.”
The CfD results were announced just days after the UK hit a historic milestone of 30GW of wind generation capacity after the opening of a major new project on the Shetland Islands.
Ofgem believes there is not a “clear and strong case” for intervention to improve power market liquidity.
Its conclusion follows a call for input into the issue following the suspension of the Market Making Obligation in 2019.
Ofgem said responses to the call did not provide a clear consensus that intervention would be justified.
“At present, we do not yet consider that there is a clear and strong case for proceeding with market intervention,” the regulator said.
“We will not introduce any specific liquidity interventions in the short-medium term but will continue discussing various policy levers with relevant teams.”
Ofgem said it will continue to monitor liquidity going forward. as.”
Results from a domestic flexibility project have highlighted its potential to help manage the grid.
NationalGridESO said the first phase of consumer trials of CrowdFlex had seen 31 electricity demand shifting events held between May and July, incentivising consumers to adjust their energy usage or make assets like electric vehicles available to the grid for automated control of when to charge.
The CrowdFlex trials tested different recruitment messages and incentive levels to investigate behavioural and technical influences on how consumers can play a larger role in balancing the national electricity system in future.
Project Lead Sanna Atherton said: "It’s exciting to see the first signs of the potential for domestic flexibility to help reliably manage the grid.”
Smaller businesses are being warned that they face higher energy costs.
Cornwall Insight said a typical small business is paying over £5,000 more a year in energy bills than prior to the energy crisis, with bills predicted to rise further from the April 2025 - March 2026 contract period.
The small business index included in its forecast predicts annual electricity bills to be an average of £13,264 by April 2025 – 70% more than 2020-2021.
Although energy bills have stabilised in recent years, they remain substantially above pre-2021 levels of £7,000 - £8,000 per year for a typical small business and the trend is forecast to continue into 2025 and likely beyond.
Dr Craig Lowrey, Principal Consultant, Cornwall Insight: “The only way we are going to deliver sustainable lower energy bills is to deal with the problem at the source – the energy generation. This requires a strong governmental focus on boosting domestic production and reducing our exposure to international disruptions."
National Grid ESO has been called on by the Government to provide advice on how to reach its clean power by 2030 target.
The system operation is to consider the generation resource mix, the networks blueprint, the location of assets and the markets frameworks that will be required for a “secure, operable and deliverable electricity system”.
The ESO said although Britain can reach its decarbonisation ambitions “there are critical challenges that need to be unblocked”. “This includes a huge expansion of low-carbon power supplies to more than double current levels,” said.
“Whilst we will advise on how to deliver the clean power 2030 ambition, we’ll continue to plan for the longer term, looking out beyond 2030 to strategically plan energy infrastructure requirements out to 2050.”
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