MONTHLY HEADLINES

Carter Jonas advises local authority on proposed 50MW energy storage scheme
After winning a public tender, The Carter Jonas energy team has delivered an assessment of the financial viability of a proposed 50MW battery storage scheme in the east of England. Battery storage is increasingly seen as a way of providing balancing services to the electricity grid, as the proportion of intermittent renewable generation (solar and wind) increases. Carter Jonas was able to draw upon their knowledge and understanding of the decentralised energy sector in the delivery of this work.

Final report on August’s power cuts advises a security standards review
National Grid has suggested that higher levels of resilience in the UK’s electricity system is required. In its submission to Ofgem last month, National Grid’s technical report concluded that, while the system operated as expected to protect the grid from further significant faults, a review of security standards could be necessary to determine whether greater quantities of reserve capacity are needed to prevent similar instances in the future. The levels of UK embedded generation and how this is connected to the grid is likely to form a crucial part of this.

 
A busy month for the Carter Jonas energy brokerage team
Volatility in UK power prices through September opened windows for both import and export clients to take advantage of competitive prices. PPAs were secured for 8.3GWh of export generation across the country and import electricity agreements were secured for over 60 clients. Markets remain competitive, with export prices in particular likely to find support in the coming weeks if we see early cold snaps squeezing supply levels. 

 

Industry News

UK energy prices, both short-term and long-term, were impacted by fears of supply shortages in mid-September, which resulted in a double spike in markets before dipping back down towards the end of the month.

On the 9th September, news from France of further nuclear plant issues caused a surge in UK energy power prices due to supply shortage fears. Month-ahead price saw the greatest gain of 12% while Winter ‘19 price rose by 9% on the day.

As prices looked to be easing, key Saudi Arabian oil facilities were attacked by drones on the 16th September, effectively halving the country’s oil output and intensifying US and Iran tensions. Brent crude oil price surged by $10 per barrel to move just below the $70 per barrel mark which filtered through to drive longer term UK energy prices upwards.

Short-term markets felt less of an impact as gas and power supplies in the UK remained healthy amid particularly high wind generation. These conditions persisted for much of the month of September and helped to keep power prices below £40/MWh. Windier than normal weather is expected to remain for the first half of October, along with seasonable norm temperatures which will likely keep short terms markets stable.

  • Government statistics confirm historic lows for coal contribution in the UK electricity generation mix in Q2 2019. Coal contributed just 0.6% of the UK’s power demand between April and June; low carbon sources combined with gas provided the majority of the country’s power. Renewable generation made up around a third of the mix.
  • The third Contract for Difference (CfD) allocation round saw offshore wind auction price plummet to below £40/MWh, 30% lower than the lowest strike price seen in the 2017 auction. This means that wind farm developers should, on paper at least, be able to deliver the projects subsidy-free, or will only require minimal contribution from consumers.
  • York is set for the first 400kW ‘HyperHub’ solar carport with battery storage as part of the ‘Go Ultra Low York’ programme. The carport will power a mix of 160kW and 7kW electric vehicle (EV) chargers at the Monks Cross Park and Ride site.

Chris HobsonAs part of the latest Rural View magazine, Carter Jonas interviewed Yorkshire-based farmer and client Chris Hobson of T H Hobson to discuss the important role renewable investment has had in the business. Chris runs the business with his brother Nick, operating across two holdings, Woodhouse and Wynam, under a Crown Estate tenancy. The 700ha arable land and 400-cow dairy business is supported by two 50kW wind turbines and a 250kW ground mount solar PV which also feeds electricity to the barn converted offices on the land.

Chris bought into renewable energy early, when the Feed-in Tariff (FiT) made the business case more attractive. In 2012, the Hobsons and the Crown Estate jointly invested in two 50kW Endurance E3120 wind turbines on grassland close to the milk parlour, with the aim of offsetting as much electricity as possible during milking and also provide an additional income stream from selling the surplus generation to the grid via a competitive PPA, brokered by Carter Jonas. The Feed-in Tariff was also secured at 24.6p/kWh and is guaranteed until 2032.

While the business measures the success of the turbines by the gross output, their role in enhancing the profitability of the dairy herd cannot be ignored. “The diary market is really tough”, Chris said, “and farmers have been under a lot of pressure due to the milk price. The wind turbines help to reduce our electricity bill from the dairy to £1,100/month from £1,500/month so it is important.”

In 2015, the business made the decision to joint invest again with the Crown Estate to install a 250kW ground mount solar PV system with the aim of supporting the electricity demand at both the farm and office units. At least half the electricity generated is consumed on site due to most of the power demand being during the daytime, with the rest being exported to the grid via a PPA. The Feed-in tariff was also secured at 10.85p/kWh which helped improve the financial model. Even with the Feed-in Tariff now closed, solar PV is still viable for businesses with a high energy use as the majority of the generated electricity can be used to offset demand. This is particularly pertinent in current markets as electricity prices are forecast to rise further in the next few years.

The Hobsons, with the help of Carter Jonas, are now looking at the potential for battery storage to be incorporated alongside the generators to enhance the income streams further. The battery market is evolving quickly with costs coming down considerably in the last year alone and Chris is keen to invest when he sees the market at its optimum. For many clients with existing generation on site, battery storage could be the logical next step in optimising assets and income streams.

Contact us if you’d like a copy of the magazine.

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 an Energy Specialist based in our Leeds office.

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