Welcome to this month's Energy & Utilities Update, keeping you up to date with the major developments you need to know.
This February 2021 update includes the RIIO-2 business plan guidance for electricity distributors, the capacity market auction parameters, a Call for Evidence on reforming the CfD, a consultation on CCUS sequencing, new developments on heat in Scotland and not forgetting our series of articles on the Green Recovery.
Energy Regulation
Ofgem publishes RIIO-ED2 business plan guidance
Ofgem has published the final version of its guidance document on the business plans that electricity distribution network operators (DNOs) must submit as part of the RIIO-ED2 price control process.
Ofgem, 1 February 2021
Ofgem reviews GB energy system operation
Ofgem has published a report setting out key findings from its review of GB energy system operation. The report considers the current and future challenges facing the system operation and assess whether the governance framework in place is appropriate for delivering the UK's net zero emissions targets.
OFGEM, 25 January 2021
Energy Subsidies
Capacity Market auction parameters: open letter from BEIS to National Grid ESO, January 2021
A letter setting out adjustments to the parameters for the Capacity Market auctions for delivery years 2021 to 2022, and 2024 to 2025.
Department for Business, Energy & Industrial Strategy (BEIS), 9 February 2021
How to support renewables, meet net zero and minimise costs: Call for evidence
On the same day as the Energy White Paper, the Department for Business, Energy and Industrial Strategy (BEIS) published a Call for Evidence titled Enabling a High Renewable, Net Zero Electricity System. We take a closer look at its objectives.
The Government has published its response to its consultation on changes to the Renewables Obligation scheme. Having considered the responses, the BEIS intend to proceed with the proposal to link the RO mutualisation threshold to the annual cost of the scheme, and for it to be re-calculated each year.
BEIS, 3 February 2021
Energy Suppliers
Consultation to review the Energy Industry Voluntary Redress Scheme
Ofgem has launched a consultation on its review of the Energy Industry Voluntary Redress Scheme. It seeks views from energy industry stakeholders on the current process in place for the Redress Scheme, to ensure that redress payments deliver the maximum benefit for the UK's energy consumers. Consultation ends: 8 April 2021.
Ofgem, 11 February 2021
Sustainable warmth: protecting vulnerable households in England
Sustainable Warmth, is the Government's updated Fuel Poverty Strategy for England, setting out how the Government will tackle fuel poverty, while at the same time decarbonising buildings, so that those in fuel poverty are not left behind on the move to net zero, and, where possible, can be some of the earliest to benefit. The strategy also announces the expansion of the Energy Company Obligation (ECO) which will run from 2022 to 2026, with an increase in value from £640 million to £1 billion per year. The updated strategy additionally announces details of new funding of £150 million for the Home Upgrade Grant.
BEIS, 11 February 2021
Energy Trading
Trading electricity with the EU: Policy paper update
This BEIS policy paper has been updated to include added details of guidance sent to transmission system operators and relevant electricity market operators on the development and implementation of the new electricity trading arrangements.
BEIS, 3 February 2021
European Commission updates notice on internal energy market
The European Commission has published a notice to stakeholders regarding the effect of Brexit on the EU internal market energy rules.
European Commission, 12 February 2021
Gas networks - revision of EU rules on market access consultation
The European Commission is seeking feedback on its roadmap for an initiative proposing to revise EU gas rules to facilitate the market entry of renewable and low-carbon gases and remove any undue regulatory barriers. Consultation ends: 10 March 2021.
European Commission, 10 February 2021
Emissions Trading
The Greenhouse Gas Emissions Trading Scheme Auctioning Regulations 2021
The draft Greenhouse Gas Emissions Trading Scheme Auctioning Regulations 2021 have been published. The instrument makes provision for the auctioning of emissions allowances to emit 1 tonne of carbon dioxide equivalent under the UK Emissions Trading Scheme (the “UK ETS”) and introduces mechanisms to support market stability in this new scheme.
Legislation.gov.uk, 11 February 2021
Oil & Gas
Updated OGA strategy comes into force
The Oil and Gas Authority (OGA) have published a revised strategy, which was laid before Parliament in December 2020 and took effect on 11 February 2021.
OGA, 11 February 2021
CCUS
Government launches consultation on sequencing CCUS deployment and allocating support
BEIS has launched a consultation and is seeking views on a potential approach to sequencing the deployment of carbon capture, usage and storage (CCUS) clusters (cluster sequencing) and how support for CCUS should be allocated. Consultation ends: 10 March 2021
BEIS, 10 February 2021
Renewable Heat
BEIS Consultation on Clean Heat Grant: further policy design proposals
BEIS has launched a consultation which seeks views on further scheme design for the Clean Heat Grant. The proposals covered are: minimum insulation requirements; biomass eligibility and ‘hard to treat’ buildings; voucher application process; and clarification on the approach to new-build eligibility. Consultation ends: 5 March 2021.
BEIS, 12 February 2021
New measures to accelerate greener, cheaper heating
The Scottish Parliament has passed the Heat Networks (Scotland) Bill which aims to support the growth of heat networks, through which clusters of homes and businesses get heating from a central source rather than individual fossil fuel boilers. For our take on the Bill, read our article here.
Scottish Parliament, 23 February 2021
Scots Law
Ofgem draft guidance Non-Domestic Renewable Heat Incentive Scheme Closure
An Ofgem consultation is seeking views on its proposed guidance document for Non- Domestic Renewable Heat Incentive: Essential Guide to Scheme Closure and the updated drafts of existing guidance documents. Consultation ends: 5 March 2021.
Ofgem, 8 February 2021
The Scottish Government's vision to transform heating in Scotland’s buildings has been published. The Heat in Buildings strategy sets out the vision for transforming more than 1 million homes and an estimated 50,000 non-domestic buildings to be using low and zero emissions heating systems by 2030 – in line with Scotland’s updated Climate Change Plan - to help meet the world’s toughest emissions reduction target for this date.
Scottish Government, 5 February 2021
Scots Law
Renewable Energy
The future of rooftop solar in the middle east
Oman and the United Arab Emirates (UAE) have both set out high targets for switching to renewable energy sources. Oman's National Energy Strategy aims to derive 30% of electricity from renewable sources by 2030, whilst the UAE's vision is to produce 75% of its energy from clean sources by 2050. We take a look at the initiatives following calls for solar panels to be installed on every roof in Dubai by 2030.
Wales
Welsh Government consults on developing hydrogen sector
The Welsh Government has launched a consultation on a pathway for developing the hydrogen sector in Wales. A baseline report on hydrogen activities and expertise in Wales has also been published. Consultation ends: 9 April 2021.
Welsh Government, 18 January 2021
Welsh Government lays draft regulations for 2050 pathway to net zero
The Welsh Government has announced it has laid four sets of draft regulations before the Welsh Parliament formally committing Wales to legally binding targets to deliver the goal of net-zero emissions.
Welsh Government, 9 February 2021
Consultation on new connections charging rules for Welsh companies
Ofwat have launched a consultation on setting rules that cover charging for new connection services for water companies whose areas are wholly or mainly in Wales. Consultation ends: 2 March 2021.
Ofwat, 2 February 2021
Water
CCW issues action plan to help business customers save water
An action plan to help business customers across England become more water-efficient has been prepared by the Retailer Wholesaler Group (RWG), with support of the Consumer Council for Water (CCW). The plan sets out a series of actions that will need to be taken in collaboration with industry, government, regulators, business customers and other stakeholders.
CCW, 11 February 2021
The Environment Agency is seeking views on their proposed updated method for determining areas of water stress to inform whether water companies can introduce compulsory metering in those areas. Consultation ends: 11 March 2021
Environment Agency, 11 February 2021
Consultation on new connections charging rules for Welsh companies
Ofwat have launched a consultation on setting rules that cover charging for new connection services for water companies whose areas are wholly or mainly in Wales. Consultation ends: 2 March 2021.
Ofwat, 2 February 2021
Ofwat's forward programme 2021-22 - draft for consultation
Ofwat are consulting on its forward programme of work for 2021-22. The consultation document sets out the work they plan to do over the financial year 2021-22 to deliver their strategic priorities and also shows how their work aligns with the Strategic Policy Statements as set out by the Welsh and UK Governments.
Ofwat, 21 January 2021
Building back better with a Green Recovery Insight Series
Building back better with a green recovery - The Insight Series
2050 is closer than we think. And the 2030 target for the water industry to decarbonise, and potentially the road transport industry too, is only ten years away. In October 2020 Addleshaw Goddard, in partnership with Utility Week, asked ourselves if we really can do this in time?
Addleshaw Goddard's Energy & Utilities team are seeking to find a way to support our clients' as they strive to meet their own carbon zero targets. As part of this endeavour we will be releasing a series of Green Recovery; Build Back Better Insights, these will provide a synoptic snapshot into a variety of different elements of this transition phase and continue to offer an optimistic glimpse into the low-carbon future we all need.
In the first deep-dive into energy policy following on from our green recovery report, we set out reaction to the UK Government’s long-awaited Energy White Paper and how will open data and digitalisation help achieve the net zero target?
Climate Change mitigation, technological advancements and economic drivers are resulting in a sustained transformation of the energy sector. Our nation’s demand habits for energy are becoming ever more complex. As such, the ability to analyse energy demands, available generation capacity and system constraints is needed now more than ever to allow us navigate the complexities of the energy targets we have set ourselves. In this review of the latest Future Energy Scenarios we delve deeper into the predictions, practicality, and implementation and if Open Data and Digitalisation will be the key for realising the benefits of an integrated, holistic energy system.
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