MONTHLY HEADLINES

The 2019 spending review avoids big green investment again
The chancellor of the exchequer unveiled a mere £30 million increase to the BEIS budget for helping to develop decarbonisation schemes in order to meet this country’s 2050 net zero target. The funding level has been slammed by members of the industry as it falls way short of the £20-40 billion which the Committee on Climate Change (CCC) determined was required. 

Energy firm Solarplicity becomes the next energy supplier to go into administration
Solarplicity became the 12th energy supplier in the last two years to cease trading. Citizens Advice research shows that these failed suppliers left behind “£172 million in unpaid industry costs, which will likely be picked up by other consumers through higher bills”. There are calls for Ofgem to tighten the regulations for new suppliers in order to protect customers. 

Uptick in export prices make PPA’s more appealing 
A small rise in export prices since the start of September sparks renewed interest in the PPA market. Carter Jonas are starting to review all PPA’s coming to an end in the next couple of months and will be in touch once tenders are complete. 

 

Industry News

UK Annual Power PricesShort-term power prices had a bearish month due to weak demand and healthy supply levels which were bolstered by the restart of the Hunterston B4 nuclear reactor, after several delays. However, the Dungeness nuclear plant restart has been delayed by six weeks which could increase supply sensitivities going into the winter period. 

Meanwhile, longer-term prices were pressured downwards by weakness in other energy commodity markets such as carbon and oil. Winter ’19 prices slipped to a 16-month low at £51/MWh which help push October ’19 Annual price below £49/MWh. 

Carbon prices fell almost Euro 9/TCO2 from the 13-year highs reached in July following economic jitters in Europe and increasing expectations of a no-deal Brexit looming. Meanwhile the oil market also crashed lower in the first week of August over ongoing US-China trade war fears and high US oil stocks before swinging back up around the $60 / barrel mark. This is still close to its lowest level since the start of the year. 

Power prices ticked back up slightly at the end of August, however, the start of September has seen prices slip back down once more.

  • The new Energy Minister, Kwasi Kwarteng, has come under immediate pressure in an open letter from a wide range of organisations within the green sector. The letter set out the need for increased support for onshore wind farms in order for the UK to achieve its net zero emissions target at the lowest cost as well as calling for an urgent update of planning rules.
  • Fracking was suspended indefinitely at Cuadrilla’s shale gas drilling site in Blackpool following a series of tremors; one being the highest recorded since fracking began on site at magnitude 2.9. This comes less than a week after fracking resumed on site and throws the future of fracking into further doubt as it has emerged that shareholders are now potentially looking to exit the business.
  • The Scottish government has unveiled a £7.5 million EV infrastructure pilot to try and ramp up EV charge point installs across the country. The pilot will involve a partnership between Transport Scotland and Scotland’s two distribution network operators (SP Energy Networks and Scottish and Southern Electricity Networks). They plan for the first projects to go live in 2020/21.

England and Wales power cutA widespread power cut that took place on the 9th August and which left nearly 1 million customers without power is now under investigation. The event, which was caused by a lightning strike, left large parts of England and Wales without electricity and had a serious impact on rail and road services.  The government department for Business, Energy and Industrial Strategy (BEIS) as well as the Energy Emergencies Executive Committee’s (E3C) will be looking into the event to identify actions that need to be taken.

Two large energy generators, a 727MW gas-fired facility operated by RWE and Orsted’s 1.2GW Hornsea 1 offshore wind farm, disconnected from the grid system within minutes of each other, causing the power cut. The result was a sudden, major drop in the nation’s electricity supply with more than one gigawatt of power lost from the system. National Grid had to reduce load on the grid by forcibly cutting selected customers off.

Following the event, it needs to be determined if there were any technical issues and examine whether the correct procedures and processes were followed. BEIS published its full terms of reference and scope for the Energy Emergencies Executive Committee’s (E3C) investigation into the matter on the 15th August. An interim review is timetabled for within five weeks and a final report is to be submitted to the energy secretary within 12 weeks. 

This investigation will involve looking into matters involving the electricity system operator and transmission system, which are both the responsibility of National Grid as well as distribution network operators (DNOs) and generators. DNOs and the decisions they make to disconnect end users will be investigated as part of the inquiry, the government has confirmed. The investigation will also consider how end users are prioritised when low frequency demand disconnection (LFDD) is called upon. Questions were raised over the prioritisation of these disconnections; LFDD is ultimately called upon when other measures aimed at stabilising the grid such as frequency response fail or cannot meet the demand. 

Although the power was brought back on within just over 40 minutes, the event highlights the importance and the need for even more energy balancing systems, such as battery and peak power schemes which can store and release electricity to the grid under these emergency situations. This instance could have been much worse without a current fleet of batteries which kicked in across the country and helped to prevent a rapid drop off in transmission frequency.

This requirement is particularly important as we continue to rely on renewable energy schemes, which are generally less reliable in terms of their generation in normal running conditions than traditional fossil fuels. 

This month’s feature article was produced by Alison Cheetham, Senior Energy Specialist at Carter Jonas.

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. 

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@ Helen Melling
Helen Melling
Senior Energy Specialist
0113 426 9868 email me about Helen
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Helen is a Senior Energy Specialist based in our Leeds office.

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