January HEADLINES
  • The government has proposed a new scheme to support smaller scale generators after the closure of the Feed-in Tariff scheme. The ‘Smart Export Guarantee’ (SEG) is open for consultation until the 5th March ‘19 and will apply to all generation that qualified for FiTs i.e. renewables up to 5MW
  • Premier Inn has partnered with EOn to install a battery at a hotel in Edinburgh, making it the UK’s first battery-powered hotel. The project aims to work out how battery storage could help cut costs and optimise the load profile of the site
  • Freezing temperatures in January led to the first real test for the UK gas system this Winter as demand soared. Energy prices rose as a result, however, healthy gas storage levels limited the gains
  • The Carter Jonas Energy Team negotiated PPAs for over 3GWh of renewable generation in January. Any generators currently on the FiT export tariff or have PPAs renewing in the next few months should be looking at contracting now

Industry News

Changeable weather conditions throughout January resulted in highly volatile short-term energy prices. Several bouts of blustery weather, combined with unseasonably mild temperatures, hit the UK in the first half of the month which pushed prices down. Colder conditions then prevailed and bumped prices back up as both gas and electricity demand rose. However, strong gas supply and healthy storage levels limited price spikes. European gas storage capacity is currently at around 65% which is up 10% on this time last year. Strong supply levels have prompted injections into UK storage facilities, meaning they are now filled to capacity.

Long-term energy prices remained relatively stable as a strengthening pound and tumbling carbon price, helped to offset the influence of an oil price rally. Brent Crude price surged back above $60 per barrel amid falling exports from Saudi, indicating that OPEC-led production cuts have started to take effect. A drop in US oil inventories provided additional support. If oil markets continue their upward trajectory, we could eventually see this this filtering through to drive long-term UK energy prices upwards.

  • Hitachi ended months of speculation by confirming that it would be suspending the development of a new nuclear power plant at Wylfa, North Wales. The news risks "blowing a hole" in the government's decarbonisation strategy.
  • Volkswagen is set to launch an energy company to supply clean power as well as smart EV chargers and grid balancing services. Volkswagen recently committed to invest €30bn in EVs over the next 5 years as they aim to become the market leaders.
  • The government announced it is consulting on changing planning rules for new energy schemes that combine energy storage with other forms of generation. Currently, schemes under 50MW go through local planning and those over 50MW go through the Nationally Significant Infrastructure (NSI) regime. The department for Business, Energy and Industrial Strategy (BEIS) plans to change the threshold for co-located projects so long as each aspect is under 50MW; for example, a 49.9MW wind turbine with 49.9MW of storage would stay in the local planning regime.

The UK government is proposing the introduction of a mandatory scheme which would see suppliers pay a price per kWh to small-scale renewable generators (up to 5MW) for the electricity exported to the grid. This is in response to wide-spread criticism over the decision to close the FiT export tariff. The Smart Export Guarantee (SEG) is open to consultation until the 5th March and the department for Business, Energy and Industrial Strategy (BEIS) are keen to ensure that suppliers pay “the market rate” for the exported power.

Only suppliers with over 250,000 domestic customers will have to provide a SEG tariff, however, smaller suppliers can voluntarily opt in to a tariff.

So far, the proposals have been met with a cautious welcome from the industry, mainly over the need to ensure generators are paid a fair price. This is because it will be left to suppliers to determine the rate and the length of the contract they are willing to offer which adds a level of risk and uncertainty into renewable investment projects. However, all tariffs provided must be greater than zero and suppliers will not be eligible to recover costs by charging customers at times of negative pricing.

The further concern is the lack of timetable for implementation and the fact that there will be no retrospective payments. SEG is unlikely to come into place until at least 2020 which leaves a significant period from the FiT closing date where projects not registered in time for FiTs receive no payments for their exported electricity.

BEIS are interested in hearing your views during the consultation period and Carter Jonas would be happy to submit these to them on your behalf.

Electric Vehicle Charging Points – The number of electric vehicles entering the UK market is forecast to soar over the next decade and we need to ensure the infrastructure is in place to cope with the demand. Carter Jonas are working with developers and investors - targeting sites along the major road networks and areas with large footfall and dwell time.  Contact us now if you think your site may be suitable as securing grid capacity early on is key.

Gas and Electricity Brokerage – Volatility in wholesale markets combined with rising non-commodity charges could force energy prices up by 50% by 2020 compared to 2016 prices according to recent figures. Carter Jonas can help manage these risk 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.

Solar PV – We are seeing an increase in approaches for large-scale subsidy free solar schemes following a decline in the cost of PV panels. With the market picking up, landowners and businesses should act now to secure rental agreements and grid connections. With the Feed-in Tariff due to close at the end of March 2019, there is an additional incentive for small scale projects to progress quickly. However, smaller schemes may still be viable after the closure providing there is high on-site electricity usage, as the generation can be used to offset forecasted electricity price rises.

Battery Storage Opportunities – The market for behind the meter battery storage and Demand Side Response (DSR) is evolving quickly. The income streams are becoming more uncertain, however, 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.

@
GET IN TOUCH
@ Helen Melling
Helen Melling
Senior Energy Specialist
0113 426 9868 email me about Helen
PREV:
NEXT:

Helen is a Senior Energy Specialist based in our Leeds office.

I can provide advice on:

Keep Informed

Sign up to our newsletter to receive further information and news tailored to you.

Sign up now