News May 2019

Translating climate targets into the energy sector means transforming our entire system: shifting our generation from large-scale, thermal power plants to decentralised, low carbon energy. The CCC’s report took a ‘cautious approach’ to renewable generation, assuming 60% of the UK’s energy capacity would come from renewable energy by 2050, yet others have been more optimistic: in its most recent Future Energy Scenarios, National Grid predicts that up to three quarters will come from renewable energy by 2050, and up to 65% of our generation capacity could be local. An increase in renewables on the grid means greater intermittency of supply, making it harder to balance supply and demand and potentially increasing price volatility in the market. We still require a constant and highly flexible supply of dispatchable power to keep the system balanced, and this need will become even more important as our demand for power grows and consumption habits change: National Grid forecast 36 million electric vehicles on our roads by 2040 which, combined with the anticipated electrification of heat, could place further strain on the system: the electrification of transport and heating would double electricity demand in a net-zero UK, according to the CCC. The UK’s current energy policy framework expects the traditional role of large gas or coal power stations to be replaced by a new fleet of nuclear plant. However, large power stations are not the best way to attain flexibility in the system. Responsive, flexible and decentralised sources can also fulfil this role, from batteries and large industrial assets to gas peaking plants placed close to areas of high demand. These sources can offer different types of flexibility – from real-time frequency response to short term flexibility during half hourly periods of peak demand and even longer stretches to respond to longer periods of imbalance caused by weather events or unplanned outages. A new fleet of thermal plant will also be costly: the planned 3GW nuclear site at Hinkley Point C alone is forecast to cost bill payers £20 billion.

Energy Live News 21st May 2019 read more »

Labour’s Alan Whitehead tries to unpick the logic behind the government’s proposals to increase taxes on clean technologies. As has been well-documented by industry groups, the government is now preparing a change that would see certain solar and related clean technologies slapped with a higher rate of VAT. How can this move be justified? Shouldn’t we be well past prioritising dirty fuels? Didn’t Parliament just declare a Climate Emergency? The answer is a little strange: it is true that solar (or particular kinds of solar installation) is set to pay top whack on VAT whilst the bag of coal still gets the tax let-off, not, probably, because anyone really wants this to happen, but because they simply didn’t pay close attention to how all these things work. Having thought this was all settled back in 2016 the EU recently requested justification for the five per cent energy wayleave applied to products. EU law doesn’t like too much material being included in reduced VAT rates and took umbrage with the UKs starting definition that five per cent VAT could apply to a solar installation project so long as the panels costs less than 90 per cent of the whole instillation. Fifty per cent was their opening definition. After some eyeballing the UK Treasury team walked away with a compromise deal: it would be set at 60 per cent. Some solar would be still be ok, because panels and kit can come in below the 60 per cent threshold for total system cost. The five per cent rate was saved: hurrah for UK Treasury. Except they hadn’t told anyone in any other department (e.g. BEIS) that this is what they were doing. Shortly after it became apparent that many modern solar installations are a bit more complicated than the celebrated new threshold suggested. Solar is increasingly installed with integrated battery systems. What then? Oh horror, you find that batteries are not on that crucial five per cent list. The result is that the total materials in the installation – solar plus battery breach the 60 per cent mark causing the 20 per cent VAT to apply. It is a bit late now, (especially since Treasury ran out of the room laughing about their 60 per cent ‘coup’) to go back and ask for all the calculations to be run again. But there is a way, and that is that you dust off the manuscript in the cupboard, take out a quill, and firmly inscribe (via the means of a statutory instrument) ‘energy storage and batteries’ on the list of energy saving materials. This makes the magical 60 per cent threshold easier to reach and to be honest should be done regardless.

Business Green 23rd May 2019 read more »