Capacity Market

A European court ruling has struck down an energy subsidy scheme in the UK that paid nuclear and fossil fuel power plants to keep the lights on during hours of peak demand over greener sources of power. Business Secretary Greg Clark has moved to allay fears that energy supplies would be at risk from the ruling. Billions of pounds are paid to coal, gas and nuclear plants to be ready to provide power in the winter, with costs added to consumer bills. It is designed to ensure that power companies always make a profit in these scenarios. But Tempus Energy, which provides services to reduce demand on the grid, claimed the system discriminated against demand reduction and in favour of fossil fuels.

Engineering & Technology 16th Nov 2018 read more »

Posted: 19 November 2018

EVs

Plans to decarbonise London’s bus fleet are continuing apace, after it was confirmed Shepherds Bush has become the fifth bus garage in the capital to install a bank of electric bus charging units. UK Power Networks announced late last week it has completed work at the Sulgrave Road site to enable 36 new electric buses to charge overnight.

Business Green 19th Nov 2018 read more »

Posted: 19 November 2018

Capacity Market

Winter has come early for the Government’s energy policy. Although temperatures have only just begun to dip, certainty over whether the UK is prepared for the cold has already plunged. In the space of one week, major policies affecting Britain’s gas and electricity supplies have been thrown into doubt. A European court ruling has brought a cornerstone scheme designed to keep the lights on to an immediate standstill. Meanwhile, Brexit fears have reignitedThe move threatens a return of price spikes over the winter, which could be made worse by growing fears over access to gas supplies. Behind closed doors, the industry is calling on ministers to prioritise policies which can help to keep a lid on prices. The growing reliance on foreign sources for gas does little to calm jitters that the UK could be held to ransom amid a winter gas supply crisis. It has just 1.5bn cubi c meters of gas storage capacity, or 2pc of the total gas system, following the closure of the Rough gas storage facility in 2017. concerns over Britain’s decision to forego investment in gas storage facilities.

Telegraph 17th Nov 2018 read more »

Electricity prices could double after the government suspended the UK’s system for ensuring there is a back-up power supply, experts have warned. The wholesale power price could hit £121 per megawatt hour (MWh) by next winter unless the so-called capacity market is reinstated, according to a report – risking higher energy bills for millions. The government suspended the capacity market on Thursday after the European Court of Justice (ECJ) found it breached state-aid rules. Under the mechanism, which had originally been cleared by the European Commission, power stations are subsidised to be on standby to provide extra electricity for the UK’s main network immediately, if needed. Some businesses are also paid to be ready to reduce their energy use when needed. However, payments and auctions have now been suspended while the government tries to find a way to re-establish the scheme. If no solution is found, projects could be pulled as they might no longer be economically viable, and prices could be pushed up by limits on supply. Prices on future electricity contracts leapt by an average of £1.40 per MWh on the day after the announcement, experts said. Analysts at the think-tank Aurora Energy Research forecast power prices next winter of about £60 per MWh if the capacity market is reinstated, but up to £121 if it is not. On Friday, the power price was £55. Energy suppliers tend to pass on to customers the cost of power by hiking bills. Many are already running on low margins following a spike in the wholesale gas price over the summer.

Times 18th Nov 2018 read more »

Posted: 18 November 2018

Brexit

France is pushing the UK to incorporate future European climate change directives into law automatically in return for an ambitious trade deal with the EU. A large number of member states fear that the UK could enjoy an economic advantage after Brexit if it were able to diverge from European laws and regulations, and they want to use their leverage now to force a commitment from future British governments. The demand by Emmanuel Macron for the UK to be tied into the EU’s Paris 2030 targets was just one of a series of interventions made by member states during recent meetings with Michel Barnier and his negotiating team. While a UK withdrawal agreement dealing with citizens’ rights, the £39bn financial settlement and the Irish border have been agreed in principle, the political declaration on the future relationship is yet to be finalised. A seven-page declaration published last week is set to become a much heavier document after member states made a series of interventions in meetings with the European commission for additional text. One EU diplomat said: “It’s a Christmas tree and all the member states are putting their baubles on it.”

Guardian 17th Nov 2018 read more »

Posted: 18 November 2018

Climate

Protesters blocked off five major bridges in central London as part of a so-called “rebellion day”. Organisers said thousands gathered in central London to demand the government take greater action on climate change. Demonstrators occupied Southwark, Blackfriars, Waterloo, Westminster and Lambeth bridges for most of the day, after a week of action by campaign group Extinction Rebellion. They later moved on from the crossings to a rally in Parliament Square. Large groups of people holding banners began congregating on the five bridges from 10:00 GMT before blocking off the traffic. The protesters say climate targets will be breached if the government spends £30bn on new roads, encourages fracking and looks to expand aviation even further. Climate change demands a seismic shift in society, they say. And they’re not seeing that yet.

BBC 17th Nov 2018 read more »

Times 18th Nov 2018 read more »

The group are demanding that the UK government tells the “truth” about climate change and should reverse all policies that undermine carbon reduction goals, UK carbon emissions should be net zero by 2025 and a national state of emergency is declared to deal with environmental issues, and a Citizen’s Assembly created to oversee changes in environmental policies.

The iNews 17th Nov 2018 read more »

Guardian 17th Nov 2018 read more »

Independent 17th Nov 2018 read more »

Posted: 18 November 2018

Energy Policy

After the trilemma – 4 principles for the power sector. Speech by Business Secretary Greg Clark on the future of the energy market. 3 weeks ago, Amazon announced that it would install solar panels across its UK sites in order to fulfil its pledge to be 100% renewable. But – and this is what is remarkable to me in the story – this decision was not only about being green, it was the best business decision taken in those terms. Green energy is, increasingly, cheap energy. This is amazing news for many of us in this room that were veterans of the debate through the Climate Change Act 10 years ago and it is particularly exciting news because of the seriousness of the challenge that we have in climate change, underlined by the IPCC’s latest report that humanity has to act to save the planet.

BEIS 15th Nov 2018 read more »

Posted: 17 November 2018

Energy Costs

Consumers face paying tens of millions of pounds too much for energy this winter because companies will be allowed to bill them for a government scheme that is no longer running. Ministers yesterday urged energy companies to voluntarily cut tariffs after it emerged that the government’s price cap, supposed to ensure fair pricing, would enable suppliers to charge customers for costs that they are no longer expected to incur. The government was forced to halt operation of its “capacity market” scheme, which pays subsidies to power plant owners to keep them running through the winter, after a European court ruling on Thursday. The scheme is designed to guard against blackouts by ensuring that Britain has enough back-up power stations to keep the lights on even if wind farms are not generating. The costs of the scheme are collected from energy suppliers, which in turn bill their customers for it. It was due to cost £1 billion this year, accounting for £11 on a typical annual household bill. All payments and collections under the scheme were suspended after the General Court of the European Union decided to annul state aid clearance that had been granted by the European Commission in 2014. Consultants at Cornwall Insight said that this put energy suppliers in line for an “unexpected windfall” because their costs would fall but the prices they charged consumers would not. Although the government’s price cap is due to force suppliers to cut their prices from January, the level of the cap was set before the court decision and includes an allowance to cover the expected costs of the scheme.

Times 17th Nov 2018 read more »

Posted: 17 November 2018

Brexit

Draft Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community 14 November 2018.

BEIS 14th Nov 2018 read more »

The draft Brexit agreement, which was released on 14 November, includes a provision that the UK will withdraw from the European Atomic Energy Community (Euratom), despite concerns that it could damage the UK nuclear energy industry, in particular civil nuclear power production. Within the document titled ‘Draft Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community’, plans are set for the UK to leave the nuclear regulator when it leaves the European Union (EU). The agreement states: “The [UK] shall have sole responsibility for ensuring that all ores, source materials and special fissile materials covered by the Euratom Treaty and present on the territory of the [UK] at the end of the transition period are handled in accordance with relevant and application international treaties and conventions, including but not limited to international treaties and conventions on nuclear safety.”

Power Technology 16th Nov 2018 read more »

Posted: 17 November 2018

Energy Policy

Business Secretary Greg Clark has today declared that the electricity ‘trilemma’ – the competing tension between the cost, security and carbon impact of energy – is “coming to an end” thanks to rapid reductions in the cost of clean power. Clark this afternoon delivered what had been billed as a major speech as part of the government’s response to the Cost of Energy Review published last year by Professor Dieter Helm. Clark said “cheap power is now green power…The policy dilemma known as the trilemma is coming to an end”. The controversial Helm Review had concluded energy prices were being pushed up by years of government policymaking distorting the market and shackling consumers with hefty legacy costs. It called for a radical simplification of the energy policy landscape to allow market forces to find the most cost-efficient route for delivering decarbonisation. During his speech Clark broadly welcomed the review’s analysis, but stopped short of announcing sweeping reforms to the current energy policy framework. He did, however, set out a suite of fresh principles to govern his department’s approach to the energy sector and announced plans for a new Energy Bill next year. Clark said the government’s new philosophy includes provisions for businesses to have more control over the market, but, where necessary, for government to be prepared to intervene on issues of insurance and optionality. He also announced a series of regulatory reviews to make the market’s complex system of rules more “agile”, allow new technologies to flourish and drive greater competition across energy networks. And in a boost to the carbon capture industry, he promised that the UK would develop a new Carbon Capture, Utilisation and Storage (CCUS) strategy to deliver mass deployment of the technology from 2030, dependant on the success of cost reduction efforts. Clark also used the speech to confirm the department is looking at alternative nuclear financing options, including the government taking a stake in new nuclear projects. As it stands the government’s plans to develop a fleet of new large-scale nuclear power stations are looking shaky following Toshiba’s decision to wind down NuGen, the UK-based nuclear business leading on the Moorside nuclear project. In response to the speech Nick Molho, Executive Director at the Aldersgate Group, said Clark’s new principles give “a better sense of the government’s long-term energy policy direction” but more is needed to boost prospects for green power deployment. “If the UK is to have an affordable and low carbon power system, the government’s upcoming policy paper needs to tackle how cheap and mature forms of renewable energy can have a route to market, how interconnection links with the EU will continue to grow after Brexit, what the carbon price trajectory will look like in the 2020s and how large consumers of electricity can be rewarded for providing flexibility services to the grid,” he said.

Business Green 15th Nov 2018 read more »

Posted: 16 November 2018

Capacity Market

The UK’s Capacity Market has been suspended until further notice after a shock ruling from the European Court of Justice (ECJ) concluded the mechanism could be in breach of EU State Aid rules. The ECJ issued its judgement in response to a legal challenge brought by clean technology firm Tempus Energy, which argued the mechanism for securing back-up power during the winter months unfairly favoured fossil fuel generators over newer, cleaner technologies.

Business Green 15th Nov 2018 read more »

The UK’s scheme for ensuring power supplies during the winter months has been suspended after a ruling by the European court of justice that it constitutes illegal state aid. Payments to energy firms under the £1bn capacity market scheme will be halted until the government can win permission from the European commission to restart it. Labour said the ruling meant that the government would have to rethink the market. Alan Whitehead, shadow energy minister, said: “This judgment effectively annuls previous state aid permission to provide subsidies for existing fossil fuel power plants. I have long criticised this bizarre arrangement, which simply throws money at old dirty power stations.” Richard Black, director of the ECIU think-tank, said the ruling should be seen as an opportunity for the government to reshape market away from fossil fuels and towards battery storage and cleaner technologies. Clark said the government was already in contact with the European commission and seeking state aid approval, so the capacity market could be reinstated. The business secretary used his speech to celebrate the rise of renewables. “Cheap power is now green power,” he said.

Guardian 15th Nov 2018 read more »

Britain’s scheme for keeping the lights on through the winter has been thrown into chaos after a European court forced it to be suspended, triggering fears over security of supply. The government said that its “capacity market” scheme, which pays power station owners subsidies to guarantee that they are available to generate electricity if needed, had been halted after the ruling. Up to £1 billion in payments for the coming year now cannot be made, denying energy companies a key source of income and casting doubt on whether their plants can still be relied on for back-up supply. The ruling also has raised fears over electricity supplies for future winters, for which billions of pounds in further subsidies have been awarded to existing and proposed plants.

Times 16th Nov 2018 read more »

The UK’s subsidy scheme for back-up electricity generation has been suspended after the European General Court found that the payments system should be subject to a state aid investigation. The surprise judgment imposed a “standstill period” on the UK’s capacity market- which guarantees power companies extra payments for generating electricity when supplies are tight. The court found that the European Commission should not have given the go-ahead to the capacity market when it was introduced in 2014 because it may not have been compatible with EU rules on state supports. The government is now barred from holding auctions scheduled for early next year and from making payments under the mechanism pending an investigation by the European Commission, casting doubt over companies’ plans to invest in increased back-up generation for the grid.

FT 15th Nov 2018 read more »

Telegraph 15th Nov 2018 read more »

Europe’s carbon market faces an uncertain few weeks over whether the UK, one of its biggest participants, will continue in its flagship system to curb pollution on the continent. Because of uncertainty over its exit from the EU, Britain has declined to schedule any of its twice-monthly auctions for new emissions permits beyond December, fearing allowances for 2019 may become invalid. The potential end of UK carbon auctions, more than three months before Britain is officially due to leave the EU, risks stoking fresh volatility in prices across the continent, according to analysts. That is because Britain is one of the biggest net suppliers of the credits that can be bought by participants in the Europe-wide scheme. While the UK could remain in the EU’s ambitious Emissions Trading Scheme (ETS), a hard Brexit that sees the country crash out of the single market would leave any 2019 allowances sold by the UK worthless, creating a potential bureaucratic mess if they continue selling them after December.

FT 16th Nov 2018 read more »

Battery storage developers in the UK are facing uncertainty over their prospective revenue stacks as the Capacity Market was placed in an indefinite “standstill period”. This morning the European Court of Justice (ECJ) ruled that in clearing the UK Capacity Market scheme for state aid, the European Commission had failed to properly investigate the scheme’s inner workings. As a result, the ECJ this morning annulled the Commission’s granting of state aid, forcing the government to essentially suspend the scheme. National Grid, the body responsible for running the scheme’s auctions, has confirmed that the forthcoming T-1 and T-4 auctions have been postponed indefinitely while discussions between the UK government and the European Commission continue.

Solar Power Portal 15th Nov 2018 read more »

Posted: 16 November 2018