The Informer

This week’s headlines: The steep fall in oil prices is predicted to accelerate the UK’s switch to clean energy; a fast-track consultation looks to relax the Capacity Market’s rules; and the green light is given to a new subsea power link to export renewable power.

  • Oil price plunge could accelerate UK’s net zero push

    The dramatic fall in oil prices could help accelerate the transition to a net zero economy in the UK, according to an environmental think-tank.

    Although previous slumps in fossil fuel prices have been seen to undermine investment in renewable energy. Dr Jonathan Marshall, Head of Analysis at the Energy and Climate Intelligence Unit, argues that the opposite could now be the case.

    Marshall said that low oil prices could squeeze out high-cost suppliers and “cripple the economics of North Sea suppliers, as well as producers in most countries outside of Russia and the Middle East.”

    That in turn could heighten concerns over rising fuel import dependence.

    Marshall said price volatility also makes it much harder to incorporate oil and gas into the long-term policies needed to achieve a growing number of net zero targets around the world.

    With a poll showing overwhelming public support for Covid-19 to pave the way for positive changes to society, there was now “a clear mandate for policymakers to try and shape things for the better.”

    “Putting a rocket under the UK’s low carbon transition, as well as pulling the plug on industries that have been on life support for years, could be one of the ways of giving the public what it wants,” he said.

    Read more

  • Government looks to relax Capacity Market rules

    Plans to relax the Capacity Market rules to reduce burdens on generators have been announced by the Government.

    The Department for Business, Energy and Industrial Strategy (BEIS) has issued a consultation on proposals to temporarily modify the obligations and deadlines for generators holding contracts under the mechanism to provide back-up power for the grid.

    The Government said the move would reduce the administrative and operational burdens on providers during the current crisis.

    The week-long consultation, which ends on Thursday this week, is much shorter than the usual period of at least four weeks as the Government said the measures need to take effect quickly.

    It stressed that security of electricity supply “remains a key overarching objective for the government” and that any amendments must not undermine this objective.

    "Any easements will be temporary and will only remain in place as long as necessary,” it added.

    Read more

  • Undersea link to export renewable energy to mainland

    Revised plans to build a 600MW subsea electricity transmission link from Shetland to mainland Scotland have been approved.

    The £700m project will enable new wind farms on the island to export power to the rest of GB.

    Ofgem has approved Scottish and Southern Electricity Networks’ plans on condition it received sufficient evidence by the end of the year that the 457MW Viking Energy Wind Farm project planned for Shetland is likely to go ahead. The project had failed to win a subsidy in the latest Contract for Difference Auction.

    As well as exporting power, the cable will also mean that electricity can be imported to Shetland, providing security of security once the power station in Lerwick closes in five years’ time.

    Jonathan Brearley, Chief Executive of Ofgem, said the project will help stimulate economic growth as the economy recovers from COVID 19, “as well as unlocking Shetland’s potential to supply low cost renewable electricity for consumers across Great Britain.”

    Read more

  • Report tackles ‘myth’ over EV emissions

    Electric cars emit on average emit almost three times less CO2 than equivalent petrol or diesel cars, according to a new study.

    The report by environmental group Transport & Environment (T&E) said the findings “put to rest the myth” that driving an electric car can be worse for the climate than an equivalent diesel or petrol.

    The organisation has developed a tool to enable motorists in Europe to allow users to compare the vehicles in several different scenarios based on vehicle segment, where the battery was produced, and in what country the car was driven. The tool also allows users to compare cars driven in 2020 and 2030, when the EU electricity grid will be even cleaner.

    Even in the worst-case scenario, an electric car with a battery produced in China and driven in Poland still emits 22% less CO2 than diesel and 28% less than petrol, the tool shows. In the best case scenario, an electric car with a battery produced in Sweden and driven in Sweden can emit 80% less CO2 than diesel and 81% less than petrol.

    T&E’s Transport and Emobility analyst, Lucien Mathieu, said: “If European governments are serious about decarbonising during the crisis recovery, they must speed up the transition to electric vehicles.”

    Read more

  • Power prices could remain low until 2025

    Power prices across Europe may not fully recover until 2025 under a worst-case scenario of the economic impact of Covid-19, according to forecasts.

    However a report by Aurora Energy Research said that under a less-extreme scenario, prices could recover by 2022.

    Aurora modelled four scenarios for economic recovery across seven EU countries, including the UK, Italy, France, Germany, Spain, the Netherlands and Poland based on factors including the duration of lockdowns, demand levels and commodity prices.

    The report also says that although revenues for subsidised renewable projects are partly or fully protected, those that are being developed on a merchant basis are likely to see more severe impacts.

    Felix Chow-Kambitsch at Aurora Energy Research, said: “The effect of Coronavirus has rippled through European energy markets – significantly reducing demand and prices of gas and electricity."

    “European power utilities are likely to experience a significant fall in revenues in 2020, with merchant-exposed renewables schemes significantly affected.”

    Read more