GOVERNMENT ANNOUNCES £166.5M FUNDING POT TO HELP CATALYSE THE UK GREEN INDUSTRIAL REVOLUTION

The UK government has this month announced plans for a funding package with the intention of progressing developments in areas of green technology  such as carbon capture, greenhouse gas removal, and green hydrogen  The £166.5 million backing is set to create over 60,000 green jobs across the UK, and includes funds to build a £20 million virtual Industrial Decarbonisation Research and Innovation Centre, tasked with accelerating the decarbonisation of energy-intensive industries that make up the majority of UK commercial emissions.

UK RISES IN EY’S GLOBAL RENEWABLES LEAGUE TABLE

This month saw the UK rise in the standings of EY’s Renewable Energy Country Attractiveness Index (RECAI), now sitting as the fourth most attractive country in the world for renewable investment. Factors such as the record-breaking prices seen in the latest round of the Crown Estate’s seabed leasing and progression of the development of the UK’s largest battery storage project are said to have played a crucial role in driving the UK up the table. The Carter Jonas energy team is also seeing this on the ground, with new entrants emerging within the market every week from investors to developers. 

OFGEM APPROVE PLANS FOR INVESTMENT INTO EV INFRASTRUCTURE

UK energy regulator Ofgem has approved plans for a £300m investment into low-carbon projects, including pledging their support towards the building of 3,550 new charging points for electric vehicles across the country, in a bid to address the issue of ‘range anxiety’ amongst existing and potential EV owners. Ofgem hope that, by providing backing for 1,800 ultra-rapid charging points and a further 1,750 rapid charging points, they can contribute to the provision of a robust electricity infrastructure befitting of a nation on the path to net zero. If you are a business owner or landowner and would like advice on EV charging opportunities, please get in touch with a member of the Carter Jonas Energy team.

UK POWER PRICES HIT A 12 YEAR HIGH!

The last year has seen notable deviation from historic seasonal power market trends due to the influence of several global drivers, including bullish oil and carbon markets. Over the last month we have seen markets push higher, with annual contracts hitting a 12-year high in late May. With this being so, the Carter Jonas energy brokerage team is looking to extend our PPA clients out as far as 2023 or 2024 to take advantage of the current strong market. The team have recently secured contracts ranging from 6.5p/kWh to 9p/kWh depending on the contract length and generator type. Any generators interested in advice on how current markets will impact their Power Purchase Agreement (PPA) should get in touch with Helen Melling, Senior Energy Specialist at Carter Jonas on 07467 335587 or helen.melling@carterjonas.co.uk.


WINDS OF CHANGE PUT ONSHORE TURBINES BACK ON THE AGENDA IN ENGLAND

It is expected that onshore wind will soon be able to again compete for government-backed contracts.

As a result, landowners and farmers in England who have previously been advised that turbines are not an option are now being encouraged to reconsider their potential, with the energy source likely to be seen as playing an important role in the UK’s efforts to achieve carbon net zero status.

Read the full article >>

THE UK ENERGY MARKET

Initially tracking a bullish carbon market upwards moving into May, short term prices saw a sharp fall into the second week of the month, with contracts dropping £9/MWh following the easing of supply concerns by the earlier-than-scheduled return of the temporarily offline IFA2 interconnector. Other drivers such as higher wind output also added downward pressure.  

Bullish carbon markets, and gas markets supported by LNG supply concerns drove near-curve contracts upwards into mid-month, with prices hitting £85/MWh by May 13th, further support coming from increased demand following the outset of a spell of colder-than-average temperatures. Day-ahead markets fell sharply to a month-low of £60.43/MWh into the third week of May, as uncertainty surrounding the new post-Brexit carbon trading scheme saw carbon markets fall, combining with a strong wind generation outlook to put pressure on short-term power markets.

Short-term prices rebounded once more into month-end, with a recovering carbon market bouncing back over the last week of the month, reaching a month-high £85.21/MWh on May 27th.  Losses were seen into the last days of May, as lower demand amongst warmer weather combined with an increase in wind generation to put pressure on contracts; day-ahead prices finished the month just over £7.5/MWh higher than they started it despite this downward movement.

Longer-term prices began the month on an upward trajectory, tracking bullish movement in carbon markets, which reached significant highs of €48.82/t. Further support in curve contracts came following supply concerns, with both BritNed and IFA2 interconnectors and the Sizewell B nuclear power plant experiencing outages over early-May.

Moving into mid-month, curve contracts continued to rise, peaking on the 14th, supported by relentless gains in the carbon market which drove the energy complex upward – the Oct ’21 annual reaching a high of £73.25/MWh, the highest front-annual price in over 12 years. This preceded a sharp fall in prices moving into the third week of the month, with pressure put on the energy complex by bearish carbon and gas markets seeing front annual prices fall from £73.25/MWh to £65.55/MWh.

Mirroring the trend seen in shorter-term markets this month, curve contracts showed recovery into the latter days of May, with the influence of a rebounding carbon market and a notable decrease in wind generation setting far-term prices on an upward trajectory. Winter ‘21 prices tracked a bullish NBP gas market upwards moving into June, as low storage levels and supply uncertainty added some premium.

as continued industry discussions in the post-Brexit market are likely to cause more volatility moving forwards. 

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, Senior Energy Specialist at Carter Jonas on 07467 335587 or helen.melling@carterjonas.co.uk.

In other news

Plans have been unveiled this month to build what would be the UK’s largest electric vehicle charging hub, with First Bus announcing their intention to install 160 charging points at their bus depot in Caledonia. The project is expected to be fully completed in 2023, with over half of the existing fleet being replaced by electric buses, the first of which are set to roll out this autumn. With transport playing a large role in Scotland’s yearly net emissions, this development sets Scotland on a key path in decarbonising their public transport system, something noted as being “absolutely critical” over the next decade by Net Zero Secretary Michael Matheson.
Reports from the International Energy Agency (IEA) have this month lauded dramatic renewable growth over the last 12 months but claims this to be but a new benchmark in the global renewables push.  2020-21 saw a 45% increase in renewable capacity additions, with a 90% increase in global wind capacity additions and a further 23% expansion of solar PV capacity seeing the highest year-on-year increase since 1999. 
Politicians in Northern Ireland have this month voted in favour of a 2045 greenhouse gas emissions target, establishing a legal framework for cuts over the next five years and beyond. The landmark bill comes as the first of its kind in Northern Ireland and sits as the first of many pledges to come, in order for NI to reach the target of an 82% reduction in emissions by 2050 as recommended by the Climate Change Committee (CCC).
This month has seen a number of plans being laid for large-scale solar PV projects across the country. For one, the Ministry of Justice has released plans to develop thousands of solar panels across four new ‘all-electric’ prisons that are to be built in England, with the scheme expected to cut £100 million in energy costs over the next 60 years. Also of note is the news that Hull University Teaching Hospitals NHS Trust intend to advance through the planning stages this month for a solar panel field in Cottingham, as a means to provide renewable power for their Castle Hill Hospital. The trust, which also runs Hull Royal Infirmary, is looking to run on a zero-carbon basis by 2040, ahead of the targets set by the wider NHS.
The number of UK nuclear power stations continues to dwindle as EDF announced the closure of Dungeness B power station in Kent, seven years earlier than planned. The plant has been in extended outage since 2018 due to a range of "technical challenges". The closure means only three of the UKs nuclear fleet will still be running by 2024, with Hinkley Point C the only plant under construction currently. This is not set to come online till June 2026, having repeatedly been delayed as well as seeing costs soar.
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Energy Valuations - Carter Jonas has valued £175m of energy and utility assets over the last 12 months. The team provides professional valuation and due diligence advice to clients such as developers, banks, private asset owners and operators of assets including solar farms, wind turbine, AD plants and battery storage sites.

Electric Vehicle Charging Points – The installation of EV charging points is a great way to futureproof 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. Find out more 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 circa 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 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 and the influence of global drivers have seen energy prices rise considerably over the last couple of years. 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 £75m 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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