A record breaking 2019 for the UK energy mix

National Grid has announced that, for the first time, more power came from zero-carbon sources than fossil fuels in 2019. This was helped by an increase in the power generated from sources such as wind, solar, hydro and nuclear which amounted to 48% of the energy used. The National Grid chief executive said: “as we enter a new decade, this truly is a historic moment,” and we in the energy team at Carter Jonas would agree!  

Energy white paper in 2020

The long-awaited energy white paper is due to be published in Q1 2020 after being consistently pushed back. The paper is set to include details on the country’s path to achieving net zero emissions by 2050, including which technologies will receive support. This follows criticism by the energy industry and environmentalists regarding the lack of information that has been provided so far by the government as to how the targets are going to be achieved.

Gas and power prices torn between healthy supply outlook and volatile oil markets

UK energy prices ended 2019 on a downward trajectory and the same trend continued into the start of January on the back of healthy supply levels and mild weather. Prices turned slightly more volatile at the start of January following the US killing of Iran’s top military official which jangled oil supply nerves amid heightening tensions between the two countries. Any further escalation is likely to drive oil prices higher and in turn support UK energy prices, however, so far this hasn’t occurred. Current low prices mean we are advising clients with contracts renewing in 2020 to review these now.

THE COAL AUTHORITY COMPLETES FOUR-YEAR SOLAR PV INITIATIVE

Advised by Carter Jonas, the Coal Authority has commissioned a new solar photovoltaics (PV) scheme marking the completion of a four-year initiative that has seen the installation of 1.5MW of solar.

Whilst preliminary accredited for the Feed in Tariff, the lion’s share of project income comes directly from offsetting electricity import at the treatment works.

In order to ensure optimum viability, Carter Jonas undertook half-hourly data analysis on the site’s electricity demand, alongside planning and grid screening to appropriately size the scheme. In addition, through negotiations with the local authority, the scheme was not conditioned to a 25-year period like most solar PV planning permissions, to ensure The Coal Authority can offset its demand for as long as possible. 

Carter Jonas reviewed over 135 sites for renewable technologies, including solar PV, wind, battery storage and gas generation. Given grid, planning and technical constraints, solar PV has been the most suitable technology across the portfolio. In total, planning permission for 2.5MW solar PV developments across 11 sites has been achieved and the Coal Authority has installed and commissioned more than 1.5MW across 9 schemes. This represents an offset of approximately 1,500,000kWh of their 25,000,000kWh consumption per annum.

The Coal Authority is a non-departmental public body sponsored by the Department for Business, Energy and Industrial Strategy. It works to protect the public and the environment in coal mining areas and manages the majority of Britain’s coal mining legacy. In 2015 it appointed Carter Jonas to undertake feasibility work to explore ways to offset its demand for electricity and minimise its impact on the environment. Following this review, Carter Jonas has supported the Coal Authority, providing planning and management advice to install solar panels across its portfolio of land and properties.

Clare Davey, Associate, Carter Jonas, said: “The Coal Authority’s very ethos is to minimise the impact of mining on the community and it has been extremely rewarding to work with such a forward-thinking client. Guided by its transformational strategy, the Carter Jonas team has used technological advancements in energy generation and the sites at its disposal to achieve a significant reduction on its energy consumption.” 

Colin Lambert, Innovation Project Manager of the Coal Authority, said: “It’s been 3 years since our first solar installation and, in that time, we have saved money and improved our carbon footprint through the schemes that met the financial and installation requirements at that time. We continue to investigate the viability of further schemes in order to meet our aim to significantly reduce carbon emissions and operational costs of treatment schemes through innovation, research and development. Carter Jonas has been pivotal to the implementation of these projects, providing assistance at every step.”

This month’s feature article was produced by Clare Davey, Associate at Carter Jonas.

THE UK ENERGY MARKET

This is in spite of a jump in prices mid-month, caused by concerns that the Ukraine-Russia gas deal negotiations appeared to have hit an impasse. January and February prices rose from around £44/MWh to £47/MWh, before sliding below £41/MWh a few days later when an agreement was eventually reached. Strong LNG flows and high wind output also combined to pressure the UK prompt market down with week-ahead contracts falling £1.10/MWh at the end of the year.

April 2020 Annual UK power contracts rose by 8% before dropping down to £36/MWh.  A continued rally in Brent crude oil markets offered partial support to longer term contracts, however, it wasn’t enough to curb the downward trend.   

The start of 2020 has so far witnessed volatility; however, improved supply confidence has kept prices on a downward trend. News of a US air strike which killed a top Iranian general resulted in a surge in geopolitical tensions and saw Brent crude rise more than 5.5% to a high of $70.74 per barrel. This filtered through to support UK energy prices in the initial aftermath, however the upturn was relatively short-lived as tensions seemed to ease and oil prices softened as a result. Oil markets could remain volatile in the following weeks depending on whether tensions escalate again but, for the time being, forecasts of mild weather and a healthy supply outlook could continue to pressure UK energy prices down.

In other news

The Smart Export Guarantee (SEG) is now mandated from 01/01/2020 which means suppliers with over 150,000 domestic electricity customers are now required to offer a tariff to power exports from small scale generators of renewable power. The most competitive tariffs already announced range from 4p/kWh to 5.6p/kWh for a 12-month contract. There were concerns that the SEG offerings wouldn’t be competitive when the scheme was first announced, however these figures indicate that suppliers are taking SEG seriously. 

Electric Vehicle charging station developer GRIDSERVE has completed its innovative hybrid solar and storage site in York, becoming the first utility-scale solar farm in the UK to use both trackers and bifacial solar panels. The 34.7MWp solar park is co-located with a 27MW battery – this combination helps maximise income streams.

Operators of the Hornsea One wind farm have been fined £4.5 million for contribution to the widespread power cut back in August that was triggered by a lightning strike. UK Power Networks have also agreed to pay £1.5 million for potentially jeopardising the network’s recovery. Ofgem’s investigation into the power cut raised questions about how the National Grid Electricity System Operator’s (ESO) management of the system is carried out. As a result, Ofgem is now conducting a review into the structure and governance of ESO.

TALK TO US ABOUT


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 60 sites that will enable the development of over 3GW 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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