Energy News
Record highs for UK wholesale energy prices
Wholesale energy prices reached fresh new highs in September amid low wind generation and soaring gas costs, coupled with extreme bullishness in commodities and carbon prices. Winter-21 power price reached £234.68/MWh by the end of the month and record system prices were also seen on the 9th September, hitting £4,037.80/MWh.
This presents significant challenges to particularly high users of gas and electricity with costs expected to more than double. To discuss how this is impacting your business and how you can manage the risks, please get in touch with a member of the Carter Jonas energy team.
BEIS publishes plans to decarbonise UK power system by 2035
The department for Business, Energy and Industrial Strategy (BEIS) has brought forward its commitments to a fully decarbonised power system to 2035, 15 years earlier than its previous 2050 target. In a speech to the Energy UK conference, the Business and Energy Secretary said: “Relying on homegrown power generation will protect consumers from gas price fluctuations. And it will in the long run bring down bills. We’ll use the wealth of Britain’s natural resources to generate cleaner and cheaper power while creating thousands of new high-skilled jobs across the UK.” The Secretary also stated the government’s Net Zero Strategy would be published within the next few weeks ahead of COP26, which we are keeping a keen eye out for.
Interconnector between UK and Norway comes into operation
The world’s longest subsea electricity interconnector has come into operation, enabling the UK and Norway to share renewable energy. At full capacity, the 1.6 billion Euro North Sea Link (NSL), a joint venture between National Grid and Norwegian system operator Statnett, will help provide enough electricity to power 1.4 million homes, and has helped ease concerns over security of supply. Meanwhile, a 500MW interconnector between Wales and Ireland has moved a step closer after a consortium was awarded the contract to build the 190km link last month.
UK government provides record funds for next CfD auction
The government is putting up £256 million a year to support renewable energy projects in the upcoming Contracts for Difference (CfD) auction. The record funding could kickstart more than £20b of investment according to industry body RenewableUK. BEIS has allocated £200m to offshore wind, and £55m to floating projects along with tidal, geothermal and wave. Established technologies such as onshore wind, solar and hydropower have a £10m allocation. The fourth round of CfD opens in December and aims to double the amount of power that was procured in the last CfD round.
In other news
Tight margins but no supply concerns
National Grid system operator ESO has released its latest Winter Outlook report which shows that electricity margins are expected to be tighter than originally forecast this winter, but the operator has stressed that there should be no supply concerns. The forecasts show a margin between supply and peak demand of 3.9GW for this winter – equivalent to 6.6% - after provision for outages and breakdowns, which is “well within the reliability standard and therefore NG are confident that there will be enough capacity available to keep Britain’s lights on,” according to ESO.
New district heat network
The UK’s largest district heat network was announced last month. If built out, it would mean up to half a million businesses and homes across the east of London are supplied by low carbon heat. Swedish energy company Vattenfall, which runs district heating schemes across Europe, has joined forces with waste management company Cory Energy for the first stage of the project
EV growth
Growth of EVs (electric vehicles) in the years ahead could see electricity demand rise by 25% by 2040, according to new forecasts. Analysis by Cornwall Insight found that a rapid rise in EV take-up could see power demand from the transport sector increase 31 times by 2040 from current levels. Its benchmark power curve report said that EVs will add an additional 71.6TWh of demand by 2040, a 25% increase on current annual demand. However, the report also highlighted the additional flexibility that EVs will bring to the system. .
