The Informer

This week’s headlines: Renewable generation is forecast to continue to grow in 2020 despite the global shock to the energy system; National Grid ESO seeks emergency powers to disconnect embedded generation; and a number of major renewables projects in the UK have been given a delivery extension.

  • Renewables ‘holding up’ despite global energy shock

    Renewable energy is the only generation source ‘holding up’ during the pandemic and is still expected to post growth in 2020, according to a new report.

    Despite supply chain disruptions that have paused or delayed some projects, solar PV and wind are on track to help lift renewable generation by 5% this year, aided by higher output from hydropower.

    However, Dr Fatih Birol, the International Energy Agency (IEA)’s Executive Director, said the plunge in demand for nearly all major fuels is “staggering”, especially for coal, oil and gas.

    The IEA said the crisis represents the biggest shock to the global energy system in more than seven decades and will lead to a significantly different energy industry in the future. The drop in demand this year is set to dwarf the impact of the 2008 financial crisis but will also see a record annual decline in carbon emissions of almost 8%.

    “It is still too early to determine the longer-term impacts, but the energy industry that emerges from this crisis will be significantly different from the one that came before,” said Birol.

    Meanwhile the Chief Executive of energy giant Royal Dutch Shell has said the crisis may lead to an acceleration in the transition to a low-carbon system. In a research note on the group’s first quarter results, analysts at Barclays also predicted that “companies growing low-carbon businesses should eventually be rewarded by the market.”

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  • System operator looks to clarify disconnection powers

    System operator National Grid ESO has raised an urgent modification to the Grid Code to clarify its powers to disconnect embedded generation at times of very low demand.

    It said the move came in light of the “unprecedented societal changes” brought about by the pandemic which has led to a significant drop in energy demand.

    This modification sets out that under emergency conditions and as a last resort the ESO may instruct a Distribution Network Operator to disconnect embedded generators connected to its system.

    The modification has an implementation date of Thursday, ahead of the May bank holiday on Friday when it expects particularly low demand and “significant operational risk.”

    “If this change is not made, there is a risk of disruption to security of supply during unprecedented low demand periods caused by the Covid-19 pandemic. This is a rapidly developing situation and could not have been anticipated,” it said in its proposal for the modification.

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  • CfD3 projects given six month extension

    The milestone delivery dates for projects successful under the third round of the Contracts for Difference (CfD) auction have been extended by six months.

    The Low Carbon Contracts Company (LCCC) said the move was in response to legal action which was taken over the exclusion of onshore wind and solar from the allocation round. The case was withdrawn but the action raised questions over whether contracts signed by winners would be honoured which may have impacted developers.

    Meanwhile, the second phases of the East Anglia One and Hornsea One offshore wind projects in the UK have begun receiving payments under their CfDs.

    The 285 MW from East Anglia One and 400 MW from Hornsea One are expected to generate enough electricity to power over 700,000 homes.

    “While the country has had to cope with the impact of coronavirus on daily life, it is good to see progress being maintained on our path to decarbonisation,” said Neil McDermott, LCCC Chief Executive.

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  • Half-hourly settlement set to deliver billions of pounds in benefits

    The introduction of mandatory half-hourly settlement across the electricity sector will deliver billions of pounds in benefits, according to Ofgem.

    The regulator is planning to add SMEs and households to the larger customers who are already billed on a half hourly basis in line with the way the system is balanced.

    A draft impact assessment published by Ofgem said the move is expected to benefit electricity consumers by between £1.61 billion to £4.56bn over the next 25 years.

    The expansion of half-hourly settlement is expected to pave the way for the rollout of more time of use tariffs and greater use of flexibility and demand side response.

    “Market-wide half-hourly settlement will place the right incentives on retailers to develop and offer new tariffs and innovations that encourage and enable more flexible use of energy, for example, time of use tariffs, automation, vehicle to grid solutions and battery storage,” the regulator said.

    Due to the Covid-19 emergency, no deadline for responses to a consultation on the proposals has been set.

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  • Plans unveiled for low carbon heat support

    Plans for a new scheme to incentivise businesses and households to decarbonise heat have been unveiled.

    The UK Government said the new Clean Heat Grant would replace the Renewable Heat Incentive (RHI) which will close to non-domestic new applicants from April 2021 although the deadline for households is a year later.

    Under its plans for a replacement the Clean Heat Grant will offer funding support of up to £4,000 for businesses and homes that integrate technologies such as heat pumps. The Government is also proposing a new Green Gas Support Scheme.

    Frank Gordon, Head of Policy at the Association for Renewable Energy and Clean Technology, said the announcements were a mixed package.

    “On the one hand, they have provided much-welcomed clarity on the completion of projects currently underway, the prospect of new projects and the government’s commitment to green gas. On the other hand, we were disappointed by the lack of extension for new non-domestic RHI projects and the implications the cap on the future grant scheme will have.”

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