Energy Bulletin
Issue 10

Short-term energy prices pulled down to lowest level since June 2017. After a bullish start to May, short term power prices were driven downwards by falling gas prices, high imports from the continent and healthy renewable generation levels. Day-ahead prices fell below £40/MWh, while Winter ‘19 prices also witnessed a drop.

Long-term prices held firm as oil markets rallied to over $73/barrel before a month-end slump. Growing tensions in the Middle East dominated price movements as news of growing US oil inventories failed to dampen the rise. Coal and carbon prices also rose which fed through to provide additional support to energy prices. However, towards the end of the month, oil markets slumped by over $10/barrel and coal prices tumbled 10% which pushed UK power and gas prices sharply back down.

• HMRC proposes to remove the discounted rate of VAT on energy saving materials including solar panels and battery storage units, effectively increasing the VAT from 5% to the full 20%. The move could hinder the progress towards the net-zero emission target.

• Updated guidance from the Environment Agency has confirmed a 4% decrease in Climate Change Levy (CCL) on electricity in 2020, but a massive 19.7% uplift on CCL on gas. The move comes as part of the government’s intention to rebalance the spread of taxation on gas and electricity.

• BEIS has officially confirmed its intention to extend the allocation of Tariff Guarantee applications on the Renewable Heat Incentive to 31st January 2021 from the previous date of 31st January 2020. The announcement comes following strong calls that an extension is essential to enable plants to build out under the remainder of the RHI budget.

More milestones reached in May as EV charging point locator service Zap-Map released data showing that the UK now has 8,471 charging sites, hosting a combined total of 13,613 individual charging devices. This compared to 8,400 operational petrol stations. Zap-Map estimates that the number of charging locations has increased by 57% in the last year, making so-called ‘range anxiety’ no longer an issue. The EV market is following suit, growing from just 3,500 cars 6 years ago to more than 210,000 in 2019. By the end of 2022, it is expected that there will be at least one million EVs in the UK as the government plans to ban the sale of new conventional petrol and diesel cars by 2040.

The charging technology is also advancing quickly with 350kW charge points starting to be rolled out that will allow electric vehicles of the future to fully recharge in as little as 10 minutes.

Investment in charging installs has really taken off in the last year with a large number of developers in the market for suitable sites for rapid charging stations. Target sites are ones next to the major road network with available grid capacity, and developers are offering competitive rental/ revenue share agreements for the ideal site.

However, EV charging points shouldn’t only be installed in public areas says Amy Souter, Partner within the Energy team at Carter Jonas. “Businesses should be actively seeking to futureproof their property to secure the patronage of EV owning customers, whether they provide workspace, retail, leisure or visitor attractions”.

Carter Jonas acts on behalf of both landowners and EV developers to identify and develop sites of all scales, from a single charge point to a rapid charging station. As with any other development securing grid capacity early is vital, which Carter Jonas can also advise on.

Electric Vehicle Charging Points – The installation of EV charging points is a great way to future proof your site as the market is set to soar over the next decade. Securing grid capacity early is key as this could restrict future deployment. Return on investment can be sought through the owning and operation of charging points, or the lease of a site to an operator for an EV charging service station. Download our brochure here.

Solar PV – Carter Jonas is actively site finding and advising clients on the development of over 50 sites that will enable the development of over 750MW of subsidy free solar schemes across the UK. For high energy users, self-development options are also still available beyond the closure the FIT scheme in March 2019.

Battery Storage – The market for behind-the-meter battery storage and Demand Side Response (DSR) is evolving quickly. The income streams are becoming more uncertain, but the possibility of tying in batteries with Solar PV is making the financial model more favourable, particularly for energy-intensive industries with an annual electricity spend of higher than £100,000.

Gas and Electricity Brokerage – Volatility in wholesale markets, combined with rising non-commodity charges, could force energy prices up 50% by 2020 compared to 2016 prices, according to recent figures. Carter Jonas can help manage these risks by working with businesses to produce an energy strategy and ensure they are not only getting the most competitive price through our brokerage service, but also taking advantage of other potential income streams. Find out more here.

Agency & Investment Opportunities – Carter Jonas has advised on over £45m of energy agency transactions over the last 12 months. Whether you are seeking energy investment opportunities, have assets to sell, or would like advice on the marketability and potential valuation of sites or operational assets, our Energy Agency team would be delighted to assist.