UK RENEWABLE SHARE REACHES NEW RECORD

The proportion of renewable electricity in the UK reached a record 37.1% in 2019, up from 33.1% in 2018. Wind generation was a strong contributor accounting for 20%. Whilst this is a step in the right direction, heavy investment is still required in the sector for the country to reach net zero targets. The government has recently published a 10-point green recovery plan for the energy sector that included a recommended 40GW of offshore wind and an additional 15GW of onshore wind and solar by 2030.

UK ELECTRIC VEHICLE SALES SHOW STRONG GROWTH AS GLOBALLY THE INDUSTRY HITS 1 MILLION SALES

UK EV sales jumped 259% in July compared to the year before according to new figures which indicates an improvement in consumer confidence. One factor could be an increase in public charge points which have risen by 500% in the past five years, according to figures from the Department for Transport (DfT). The government is ploughing increasing levels of funding into improving EV charging infrastructure nationally. Just last week, the Rockingham Clean Energy Hub, the UK’s first large-scale EV logistics hub, located in the South East Midlands, secured government funding of almost £1.2 million. South Yorkshire has also secured funding that will be used to increase EV charging points by around 12% in the Yorkshire and Humber region.

CARTER JONAS GO GREEN TO HELP WITH NET ZERO TARGETS

Carter Jonas has secured renewal gas and electricity contracts from 100% renewable sources as part of its commitment to reduce carbon emissions. This means all electricity is generated from wind and hydro assets, while gas is produced from renewable sources such as agricultural materials and food waste. Helen Melling in the Energy Team said, “We wanted to practice what we preach, and this is just one step in demonstrating our commitment to a number of sustainable goals.”

UK GOVERNMENT CUTS THE RED TAPE ON LARGE SCALE STORAGE PROJECTS

The Government’s push to achieving a Net-Zero economy by 2050 has moved renewable energy performance up the political agenda. As a consequence, the vital function of battery storage in overcoming the intermittency of renewables has come to the fore, as reflected by the announcement last month to increase the threshold of battery storage schemes determined at local level from 50MW up to 200MW. This move, it says, could stimulate the construction of more than 100 new power storage facilities. The announcement means that schemes exceeding 50MW will no longer sit within the Nationally Significant Infrastructure Projects (NSIP) regime.

Storage schemes hold surplus renewable energy and release it back to the grid during periods of high demand, helping reduce fossil fuel use and atmospheric pollution. Previous legislation often acted as a constraint to the more extensive projects, as the NSIP regime is typically more costly and time consuming than applications determined at a local level and, as such, most being progressed were within the 50MW threshold. With these new measures in place, applications for more substantial schemes can be made to local planning authorities rather than to the Secretary of State.

This should help accelerate the application process for larger projects as well as reducing the overall timescales for delivery, which will ultimately help us meet our Net-Zero targets and at a faster pace. The UK currently has 1GW of battery capacity with another 4GW of capacity being planned.

Carter Jonas has achieved planning consent for multiple battery storage schemes under the 50MW threshold and are looking forward to progressing opportunities on a larger scale now the route to market has been made simpler. The Carter Jonas Energy Team is currently managing energy storage projects in excess of 1GW.

For more information on the changes, please contact Clare Davey on 07584 68203 or email clare.davey@carterjonas.co.uk

THE UK ENERGY MARKET

Short-term UK power prices had a volatile month, directed by changeable wind levels and volatile gas prices. Day-ahead prices swung between £24/MWh and £35/MWh with prices lowest during blustery weather conditions when wind generation surged to account for up to 38% of UK output, before sliding to just 5%. Meanwhile, month-ahead prices pushed up to a six-month high, above £36/MWh over planned outages at several gas-fired plants and ongoing nuclear outages which impacted on supply levels.
Further out, power prices rallied before dropping back down by the end of the month. In the first two weeks of July, Annual prices reached their highest levels since mid-January, with October 20 Annual up around £1/MWh from the start of the month. The rise was largely down to a strengthening EUA (European carbon allowances) market, which touched a 14-year high of over EUR 30/tonne of CO2. Gains were also seen in gas and oil markets which filtered through to support UK energy prices. However, prices then slumped by as much as 8% since mid-July, wiping out the gains seen since mid-June. EUAs tumbled and lower gas prices were the main drivers for the drop, along with growing concerns that post Covid-19 economic recovery could take longer than previously expected, which could leave significant spare energy capacity available for some time.

The UK energy market outlook remains uncertain but markets are becoming increasingly volatile which could eventually push prices up over the next few months especially with rising consumption levels across UK and the rest of Europe.

Any businesses interested in advice on how current markets will impact their energy contract and/or Power Purchase Agreement (PPA), should get in touch with Helen Melling, Energy Specialist at Carter Jonas.

UK annual power prices

In other news

National Grid have announced a £10 million testing facility to see if hydrogen can replace methane in heating homes. At present, 85% of homes and 40% of the UK’s power needs are supplied by gas and a sustainable alternative is vital if we want to reach a net zero future. The facility will be built at Spadeadam in Cumbria and will form a network of retired assets to test hydrogen at transmission procedures and see how the equipment performs. National Grid have submitted their plans to Ofgem and, if successful in securing funding, construction will begin in 2021 with testing to follow in 2022.
A decrease in wholesale gas prices throughout 2020 due to the impact of Covid-19 has seen the energy price cap for domestic consumers falling by £84 to £1,042 a year for this winter. The 7% drop takes the level to the lowest since the cap was introduced on the 1st January 2019.
New research has suggested that offshore wind power will eventually be so cheap to produce that it will fall below the cost of fossil-fuelled power and become the lowest-cost form of energy in the UK. Analysis by Imperial College London said the most recently approved offshore wind projects across five countries in Europe will most likely operate with ‘negative subsidies’ which in effect means they are paying money back to the government.
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Helen Melling
Senior Energy Specialist
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Helen is a Senior Energy Specialist based in our Leeds office.

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