As part of its Strategic Environmental Assessment (SEA) of its draft plan/programme for offshore energy (OESEA4), the government published its response to its Scoping for Environmental Report consultation which ran from March 2021 to May 2021
The UK ETS Authority – made up of HMG, the Scottish government, Welsh government and Northern Ireland Executive – announced that it will not redistribute or release additional supply into the UK Emissions Trading Scheme’s (ETS’s) market.
National Grid Gas Transmission (NGGT) raised Contingency Gas Procurement Arrangements When a Supplier Acts Under a Deed of Undertaking.
Ofgem issued its decision to award Scottish Power (SP) Transmission, Scottish Hydro Electric (SHE) Transmission, and National Grid Electricity Transmission (NGET) £1.33mn each under RIIO-T1 Environmental Discretionary Reward (EDR) scheme for 2020-21.
SP Energy Networks has accepted bids of 555MW of flexibility services following its spring round of tendering and will build on this success with a second flexibility tender later this year.
The Sustainable Energy Association (SEA) published a report – commissioned by BEIS – setting out recommendations for delivering a successful Home Upgrades Grant (HUG) scheme.
The Competition and Markets Authority (CMA) published its response to the future of transport regulatory review: zero emission vehicles (ZEVs) consultation
Also covered in this Regulatory Report:
- Government issues response on new generating technologies for the CM
- National Grid ESO publishes Electricity Ten Year Statement
- Fourth CfD round largest yet, with £285mn allocated annually
- Catapult: accurately track carbon to end greenwashing
- ULEZ expected to reduce Londonwide NOx emissions by 30% in 2021
- EVs cost to be on equal footing to diesel and petrol by 2024
- ESC finds no type of UK property unsuitable for heat pumps
BEIS issues consultation response to offshore energy SEA
As part of its Strategic Environmental Assessment (SEA) of its draft plan/programme for offshore energy (OESEA4), on 22 November the government published its response to its Scoping for Environmental Report consultation which ran from March 2021 to May 2021. The purpose of the scoping report was to set out sufficient information to enable stakeholders to give feedback on the scope and level of detail of information to be included in its SEA report. Respondents were asked to highlight additional initiatives and datasets they considered relevant to the draft programme, and whether they agreed with the choice of Regional Seas used to help describe the environmental baseline in the report.
Several information gaps related to marine planning, site selection and the understanding of impacts on populations were identified. Also highlighted was a lack of environmental baseline data on some prospective regions for floating offshore wind, such as data on marine mammals in the Celtic Sea. Another comment was that the evidence base to support the development of tidal lagoons has not increased significantly since the Severn Tidal Feasibility Study in 2010. The government’s response confirmed that all the suggested additional information sources have been reviewed and will be incorporated into the SEA, where appropriate. It added that recommendations from previous SEAs continue to be addressed through the OESEA research programme.
There were several responses, unrelated to any of the questions posed, including that downstream emissions from oil and gas production should be assessed in the SEA. Another respondent commented that the Climate Compatibility Checkpoint design for future seaward licensing rounds should be part of the SEA process. On this, the government said that while the checkpoint’s design is a separate process from the SEA, if a final design is available during the drafting of OESEA4, its relationship with the draft plan/programme will be considered.
A consultation on the OESEA4 Environmental Report and the draft plan/programme is due in early 2022.
UK ETS Authority to not intervene following triggering of CCM
The UK ETS Authority – made up of HMG, the Scottish government, Welsh government and Northern Ireland Executive – announced on 14 December that it will not redistribute or release additional supply into the UK Emissions Trading Scheme’s (ETS’s) market at this time, following the triggering of the Cost Containment Mechanism (CCM) at the start of December.
The CCM allows the UK ETS Authority to intervene, if deemed appropriate, if prices are elevated for a sustained period. A statement from authority ministers read: “The authority has confidence that this decision will uphold the objectives of the UK ETS as a market-based approach to reducing emissions and incentivising participants to find the most cost-effective solutions to decarbonise”.
“The authority took into account the factors that may have affected UK ETS allowance prices, and the context of recent developments in energy markets. The UK ETS authority will continue to monitor the market closely and remains prepared to take timely and proportionate action, within the rules of the scheme, to support its effective functioning should the CCM be triggered again.”
The authority will release a steady supply of allowances to the market ahead of the 2021 compliance deadline of 30 April 2022 as planned.
On 1 December, BEIS published a response to views gathered on its October 2021 consultation to identify emerging generating technologies that may be eligible to participate in capacity market auctions. Under Rule 2.4 of the Capacity Market (CM) Rules, the Secretary of State is required to consult annually on whether any new generating technologies, not already identified as a Generating Technology Class, which can contribute to security of supply have emerged and should be eligible to participate in future CM auctions.
BEIS received replies from three stakeholders, two of which highlighted the need to consider how technologies which enable electric vehicles to deliver electricity to the grid (vehicle to grid) can access the CM. They thought that it could be suitable to define a separate GTC for electric vehicles, rather than relying on existing GTCs such as those for storage or demand side response. The other respondent suggested the inclusion of tidal and geothermal technologies.
The government stated it would continue to consider these technologies with the Electricity System Operator and how best to assess their potential contribution to security of supply and future participation in the CM.
The Electricity Ten Year Statement (ETYS) is central to the ESO’s future network planning and uses data from the Future Energy Scenarios (FES) to identify points on the transmission network where more transfer capacity is needed. The 2021 ETYS reported a number of finding which included that North-south power flows will continue to grow in the next decade with re-affirmed ambition to meet 30GW of offshore wind installed by 2030. The system will need to be prepared to manage large swings in power flows dependant on intermittent wind generation.
In addition, the system will face growing needs across multiple DNO regions, with a requirement for greater investment in the transmission network highlighted across four regions due to a tripling of wind capacity in the North of Scotland (i), at least a doubling of transfer requirements in the North of England (ii), increased renewable and interconnector capacity in East Anglia (iii) and greater interconnector capacity in the South of England (iv). Furthermore, delivery of network reinforcements through NOA pathfinder projects is expected to significantly reduce network constraints. The highest number of excess flows beyond boundary capabilities are expected in the North of England and the English-Scottish border, along the B6, B7 and B8 boundaries, where current pathfinders are focussed.
On 13 December, the government opened the fourth and largest round of the Contracts for Difference (CfD) scheme to date, which is aiming to secure 12GW of electricity capacity. The fourth round is open to an expanded number of renewable energy technologies, with offshore wind, onshore wind, solar, tidal, and floating offshore wind projects, amongst others, all eligible to bid for funding in the scheme’s auction process. BEIS detailed that a total budget of £285mn a year has been allocated to the round, with £200mn of this to be made available for offshore wind.
Business and Energy Secretary Kwasi Kwarteng said: “Our biggest ever renewables auction opening today will solidify the UK’s role as a world-leader in renewable electricity, while backing new, future-proof industries across the country to create new jobs. By generating more renewable energy in the UK, we can ensure greater energy independence by moving away from volatile global fossil fuel prices, all while driving down the cost of new energy.”
NG proposes new role of contingency gas balancer
On 30 November National Grid Gas Transmission (NGGT) raised UNC791 Contingency Gas Procurement Arrangements When a Supplier Acts Under a Deed of Undertaking, which proposes to create a new role for NGGT to procure gas for suppliers operating under their Deed of Undertaking (DoU) following a large shipper market exit.
UNC791 would introduce a new role for NGGT called the Contingency Procurer of Supplier Demand (CPoSD) through which it would be able to access additional ways to procure gas to meet the demand of terminated supply meter points. NGGT would seek to procure 30-70% of the required additional gas using day-ahead, front month and within month auctions and exchanges. These are currently unavailable to it, as its residual balancer role only allows access to the On-the-day Commodity Market (OCM). The proposal from NGGT follows the withdrawal of UNC789 Energy Balancing Arrangements During the Operation of a Supplier Undertaking to Transporters on 17 November.
Transmission companies awarded £1.33mn
On 25 November, Ofgem issued its decision to award Scottish Power (SP) Transmission, Scottish Hydro Electric (SHE) Transmission, and National Grid Electricity Transmission (NGET) £1.33mn each under RIIO-T1 Environmental Discretionary Reward (EDR) scheme for 2020-21. With an annual value of £4mn, the EDR scheme is a reputational and financial incentive that aims to sharpen the focus of the electricity transmission owners on strategic environmental considerations and organisational and cultural changes to facilitate growth in low carbon energy while providing value for money to consumers.
The financial reward is only available to companies that have a satisfactory executive level annual statement (ELAS) and have achieved the “Leadership” performance band for scoring more than >70% on the scorecard for the scheme. SP Transmission, SHE Transmission and NGET each scored more than 95%. Ofgem made special note of the Transmission Owners’ responses to external drivers in calling for a faster pace of decarbonisation, despite challenges resulting from the pandemic, evident in the regulator’s proactive engagement with wider stakeholders on strategic issues for the net zero transition.
Ofgem therefore issued the awards on the basis that the companies went beyond conventional approaches by taking a whole system perspective and collaborating with a range of stakeholders to implement new thinking.
SP Energy Network accepts bids of
SP Energy Networks has accepted bids of 555MW of flexibility services following its spring round of tendering and will build on this success with a second flexibility tender later this year. In an announcement on 26 November, it states that in its latest round of tendering it issued a call for flexibility services for the period between 2023 and 2028 with 1.4GW of capacity sought at all voltage levels in total, and 555MW of bids now being accepted.
It says these bids – in addition to capacity it already has contracted – could provide more than 700MW of flexibility services – equivalent to 100,000 electric vehicles on the charging network. SP Energy Networks also says it is now seeking 110MW of flexibility services for the next three years in its second tender this year, which is says has the potential to enable over 800MW of flexibility services.
SEA report on industry response to HUG scheme delivery
On 25 November the Sustainable Energy Association (SEA) published a report – commissioned by BEIS – setting out recommendations for delivering a successful Home Upgrades Grant (HUG) scheme. It outlines the industry’s take on the government’s current thinking for the local-authority-led scheme ahead of its early 2022 launch, before exploring potential future HUG schemes where funding is directly provided to the installer or consumer. The HUG is one of the funding commitments set in the government’s Heat and Buildings Strategy which includes the target of achieving, as far as possible, Energy Performance Certificate (EPC) Band C by 2030 for fuel poor homes and by 2035 for all homes. The scheme promotes a fabric first principle and initial focus on fabric specific measures (e.g. insultation) followed by heating system considerations, and technologies such as solar PV thereafter.
Phase 1 HUG funding is included in the Local Authority Delivery (LAD) scheme phase 3 funding as part of the £350mn Sustainable Warmth Competition, with respective bids currently being analysed by the government to understand trends and identify any regional disparities, for example. The former phase 1 provides financial support of up to £25,000 for energy efficiency and low carbon heat measures to eligible households. Eligibility is subject to the property not being connected to the gas grid for heating purposes, having EPC rating of D to G and an annual household income of £30,000 or less.
Eligibility for fuel poverty schemes relies on benefits proxies and results in the exclusion of low-income households that do not claim means tested benefits. The report details the government’s thoughts on the use of new [additional] metrics such as Indices of Multiple Deprivation (IMD) – which measures the relative deprivation of different neighbourhoods across the UK – alongside the English Housing Survey data. Use of the IMD metric to provide a list of eligible postcodes for area-based targeting and delivery of the HUG could expand the eligible pool of homes.
CMA responds to future of transport regulatory review
On 1 December, the Competition and Markets Authority (CMA) published its response to the future of transport regulatory review: zero emission vehicles (ZEVs) consultation. The response recommends that local authorities (LAs) take a more active role in managing and planning on-street charging roll-out, and that governments take action to ensure LAs are properly equipped and incentivised. The CMA also says it would support and welcome the proposals for a statutory obligation for LAs to plan for and provide charging infrastructure, and that it supports the government’s proposal to introduce a new power enabling it to require landowners to install chargepoints in non-residential areas if needed. The CMA has several recommendations to improve driver experience:
- It is easy to find working chargepoints e.g., people can access data on live availability and working status and expect and depend on minimum reliability standards.
- It is simple and quick to pay e.g., no sign-ups needed, contactless bank account payment is widely available, and charging networks keep up with new payment technology.
- The cost of charging is clear and easily comparable e.g., prices are presented in a simple, standardised p/kWh format.
- Charging is accessible and interoperable e.g., chargepoints can be used by all drivers, are not limited to a single brand of car, and follow inclusive design principles so they are accessible to and usable by as many people as possible.
A new report by Energy Systems Catapult and electricity market Balancing and Settlement Code (BSC) manager Elexon, sets out how the energy industry could create common rules, standards and processes to measure, track, report and verify the carbon content of electricity within the power system. Published on 6 December, Accurately Tracking Carbon in Electricity Markets notes that if carbon is tracked in real-time from generator to consumer, it would rid the market of greenwashing energy tariffs, whilst accelerating decarbonisation of the power system by 2035 – the target recommended by the Climate Change Committee in the Sixth Carbon Budget.
The report explains that the current governing rules for wholesale and retail electricity markets have no requirement for the collection and sharing of data relating to the carbon intensity of the electricity produced or consumed. However, Angela Love, Director of Future Markets and Engagement at Elexon said “we believe that established rules, processes, and systems that support the power system may be easily extended to support carbon tracking. This is likely to be more cost effective than building entirely new processes and systems”.
A report released by the Mayor of London, Sadiq Khan, on 10 December has found the expansion of the Ultra Low Emissions Zone (ULEZ) on 25 October 2021 has driven an increase in the number of vehicles compliant with the new emissions standard. The number of non-compliant vehicles seen in the zone each day has reduced by 47,000 in first month, a reduction of 37%, while the number of vehicles driving in the zone at all on weekdays has fallen by 11,000. As a result, Londonwide NOx road transport emissions are expected to reduce by 30% in 2021, with CO2 emissions from cars and vans in the zone expected to reduce by 5% in the first year.
On 9 December, PwC announced that – according to its report Fleets ahead! Emerging pathways to decarbonise UK fleets – companies have up to three years to substantially transition their fleet operations to low carbon or risk reputational damage. PwC states the cost of commercial electric vehicles (EVs) will be on equal footing with petrol and diesel counterparts by 2024. It is suggested that while companies that act too quickly may miss out on cost savings, there is greater risk is for those who act too slowly in an increasingly emissions-conscious market.
The report outlines five focus areas that PwC says could define the future market, including improving public charging provisions, developing alliances to accelerate the decarbonisation pathway, addressing capacity and choice, establishing complex decarbonisation pathway for fleet managers, and tackling difficulties in decarbonising heavy transport.
Energy Systems Catapult (ESC) has published on 16 December the findings of its Electrification of Heat (EoH) project which states that heat pumps can be successfully installed in all housing types. The project, funded by BEIS, is aiming to better understand the technical and practical feasibility of a large-scale rollout of heat pumps into existing British homes. To do this, ESC appointed three Delivery Contractors to install up to 750 heat pumps in three regions across GB: the South East of Scotland, Newcastle, and the South East of England. A range of different types of heat pumps were also tested, including low-temperature and high-temperature air-source heat pumps, ground-source heat pumps, and hybrid heat pumps incorporated with a gas boiler. Furthermore, some additional technologies, such as heat batteries were incorporated.