All the key energy and water developments this month in one place.
This month we cover the next stage of the CCUS cluster process, the CfD supply chain consultation responses, the latest in electricity networks including introducing competition, further relief for energy intensive industries, measures to keep coal power stations open for longer, and much more.
20 projects shortlisted for next stage of carbon capture cluster process
Twenty innovative projects have been shortlisted for Phase 2 of Track 1 of the carbon capture, usage and storage (CCUS) cluster process, representing an important step towards a net zero economy. This follows the commitment in the Prime Minister’s Ten Point Plan for a Green Industrial Revolution, to deploy CCUS in 2 industrial clusters by the mid-2020s, and a further 2 clusters by 2030. For background see our Insight, CCUS Cluster Sequencing.
Department for Business, Energy and Industrial Strategy (BEIS), 12 August 2022
Business model for power bioenergy with carbon capture and storage (power
A BEIS consultation is seeking views on proposals for a business model to incentivise deployment of power bioenergy and carbon capture (BECCS) within the UK. Consultation ends: 7 October 2022.
BEIS, 11 August 2022
- Contracts for Difference
Outcome to consultation on updating the Allocation Round 5 Supply Chain Plan questionnaire for CfDs
BEIS has confirmed its decision on implementing a series of amendments to the supply chain questionnaire ahead of Allocation Round 5. Amendments relating to specific questions have been made including:
- broadening the scope of potential commitments able to be given for some questions;
- further clarified guidance relating to the types of commitments that can be used; and
- additional examples clarifying what is meant by industry standards and common practices.
BEIS, 9 August 2022
Government response published to consultation on CfDs and proposed amendments to supply chain plans
BEIS has published its response to its consultation on proposed amendments to supply chain plans for the Contracts for Difference (CfD) Allocation Round 6 (AR6) that would enhance their impact. The Government confirmed that it will keep further changes to supplychain plan policy under review, and will not be making changes to the threshold of supply chain plans or introducing negotiated supply chain plans at this stage. The proposal to introduce a graduated penalty system will remain in scope and the responses to this
proposal will inform the longer-term thinking being done on Allocation Round 7 onwards.
BEIS, 9 August 2022
- Electricity Networks
Electricity Networks Strategic Framework
A joint BEIS and Ofgem policy paper presents a strategic framework setting out the actionsthe Government and Ofgem are taking to ensure the electricity network can act as anenabler of a secure, resilient, net zero energy system.
BEIS & Ofgem, 4 August 2022
Land Rights and Consents for Electricity Network Infrastructure: Call for evidence
BEIS has published a consultation seeking views on the current land rights and consentsprocesses for electricity network infrastructure. Consultation ends: 15 September 2022.
BEIS, 4 August 2022
Government sets out response to consultation on competition in onshore electricitynetworks
BEIS has published its outcome to its consultation on details related to the introduction ofcompetition to onshore electricity networks. It focused on how the competitive frameworkwill be implemented in the electricity network market. BEIS states that the decisionsincluded in the response should provide more clarity and certainty about the way thecompetitive framework will operate for onshore electricity networks once they have therelevant legislative powers. BEIS recognises that certainty of delivery model is useful whennetwork planning and will continue to engage with stakeholders on a regular basis andwork with Ofgem as this policy develops further.
BEIS, 4 August 2022
Holistic Network Design: First step towards centralised strategic network planning
As part of the pathway to 2030 workstream of the Offshore Transmission Network Review,National Grid ESO has published proposals for Holistic Network Design (HND) of the GBElectricity Transmission Network in which the offshore and onshore elements areintegrated, enabling both the connection of offshore generation to shore and transmissionof electricity to the points of demand. Our Insight article takes a look at HND projects, theirbenefits and next steps.
ETNPR: Minded-To Decision published
Ofgem consulted on the initial findings of the Electricity Transmission Network PlanningReview (ETNPR) in November 2021. Ofgem has now issued its Minded-To Decision and adraft impact assessment of the proposed changes. Our Insight article takes a further look atthe arrangements.
- Energy Efficiency
Strengthening the Energy Savings Opportunity Scheme (ESOS)
BEIS has published its response following its consultation on strengthening the EnergySavings Opportunity Scheme (ESOS) to improve the uptake of energy efficiency measures, and increase the benefits for participating businesses. On 19 July 2022, the Governmentannounced its intention to include powers to make the necessary changes to the scheme inthe Energy Bill via an amendment. Subject to the necessary Parliamentary scrutiny andscheduling including seeking views from the devolved administrations, the Governmentintends to implement some of the changes in advance of the current Phase 3 compliancedeadline, and others, such as adding a net zero audit element, in Phase 4.
BEIS, 28 July 2022
Heat in Buildings Strategy: Domestic EPC Reform Consultation: Analysis SummaryReport
A Scottish Government publication provides an analysis summary of the energyperformance certificate (EPC) reform consultation that ran from July to October 2021.Proposals included renaming the current metrics and adding a third metric, such that EPCsdisplay separate ratings for energy efficiency, cost, and carbon emissions. This summaryreport outlines the key findings.
Scottish Government, 24 August 2022
- Energy Regulation
GB Review of Electricity Market Arrangements (REMA).
The UK Government is reviewing the electricity market arrangements in GB. It is a wide-ranging review that affects anyone participating in British electricity markets, whether that be the wholesale market, the balancing mechanism, ancillary services, the Contract for Difference (CfD) or the capacity market. It will also affect the Dispatchable Power Agreement for power CCUS, the Regulated Asset Base model for large-scale nuclear, and the interconnector cap and floor. All of these could change. This means you will need to look again at your business models.
Statutory consultation on modifications to the Electricity System Operator licence conditions
Ofgem has published a consultation seeking views on the proposed modifications to the Electricity System Operator (ESO) licence conditions that sets out how much transmission network use of system (TNUOS) and balancing services use of system (BSUOS) revenue the ESO is allowed to collect. The proposed changes will mean the ESO's allowed revenue will better reflect changes in the allowed revenue of OFTOs, and historical RIIO-1 revenue.
Consultation ends: 22 September 2022.
Ofgem, 24 August 2022
Government to consider further relief for energy intensive industries
A BEIS consultation is seeking views on amendments to the exemption scheme for energy intensive industries (EIIs) from the indirect costs of funding the Government’s renewable electricity policies. Consultation ends: 16 September 2022.
BEIS, 12 August 2022
Scottish Government consultation seeks views on the exemption scheme that
provides relief to energy-intensive industries
This consultation enables the Scottish Government to fulfil its obligation, in parallel with the UK Government on the exemption scheme that provides relief to energy-intensive industries (EII) for a proportion of the indirect costs of funding renewable electricity policies. Consultation ends: 23 September 2022.
Scottish Government, 22 August 2022
Guidance for the Implementation of the Network and Information Systems
Regulations for the energy sector in Great Britain
BEIS has published updated guidance providing high level policy principles for compliance with the Network and Information Systems Regulations 2018, for operators in the energy sector.
BEIS, 9 August 2022
The Environmental Protection (England) Extension of Limited Lifetime DerogationEnd Dates Direction 2022
The Department for Environment, Food and Rural Affairs (DEFRA) has published aministerial direction issued to the Environment Agency that allows electricity generationsites in the UK, which have been given a limited life derogation (LLD), to operate until 30September 2024. This is to address energy security issues if they arise, whilst aiming tolimit unnecessary pollution.
DEFRA, 29 July 2022
The Environmental Protection (England) Coal Fired Power Station Direction 2022
The Secretary of State for Environment, Food and Rural Affairs, The Rt Hon GeorgeEustice MP, has issued a ministerial direction to the Environment Agency to temporarilyrelax permitting conditions for coal-fired power stations in England during the winter period1 October 2022 to 31 March 2023. This is to address energy security issues if they arise,whilst aiming to limit unnecessary pollution.
DEFRA, 29 July 2022
Hydro Benefit Replacement Scheme and Common Tariff Obligation statutory reviewconsultation
BEIS have published a consultation seeking views on two statutory schemes which protectthe North of Scotland consumers from the high costs of electricity distribution in that area.The Hydro Benefit Replacement Scheme and Common Tariff Obligation help protectconsumers and are reviewed every three years, and this consultation forms part of thereview process. The Government proposes to retain both schemes, subject to some minortechnical improvements. Consultation ends: 23 September 2022.
BEIS, 29 July 2022
- Energy Storage
Facilitating the deployment of large-scale and long-duration electricity storage:Government Outcome
Following the consultation seeking evidence regarding barriers to the deployment of large-scale and long-duration electricity storage (LLES), and on different approaches forsupporting the deployment of these technologies, the Government has confirmed that it willensure the deployment of sufficient LLES to balance the overall system by developingappropriate policy to enable investment by 2024. A research report on the role andrequirements for long-duration electricity storage and associated system impacts has alsobeen published.
BEIS, 3 August 2022
- Energy Suppliers
The Electricity and Gas (Energy Company Obligation) Order 2022 (SI 2022/875)
This Order sets out the next phase of the Energy Company Obligation (ECO4) will beadministered.
It will require obligated energy suppliers to promote the installation of energyefficiency and heating measures in Great Britain for reducing the cost to low income andvulnerable households of heating their homes. A supplier must achieve its obligation by 31st March 2026.
In force: 27 July 2022.
Ofgem updates price cap level and tightens up rules on suppliers
Ofgem has announced the energy price cap will increase to £3,549 per year for dual fuelfor an average household from 1 October 2022. Ofgem says it will continue to work withgovernment, consumers groups, charities and suppliers, in supporting any new package ofhelp or measures to ease the crisis. Ofgem has also strengthened the rules around directdebits to ensure suppliers set them at the right level.
Ofgem, 26 August 2022
Ofgem confirms changes to the price cap methodology and frequency
Ofgem has confirmed that the energy price cap will be updated quarterly, rather than everysix months, to better reflect current gas and electricity costs and allowing energy suppliersto better manage their risks.
Ofgem, 4 August 2022
Government concludes technical consultation on the Energy Bills Support Scheme
BEIS has published the outcome following its consultation on the technical aspects of theEnergy Bills Support Scheme (EBSS) to test its design. The proposals in the governmentresponse set out the final policy decisions reached for the delivery of the EBSS. Supplierswill be required to provide each eligible domestic electricity customer they serve on theQualifying Date (first of each EBSS delivery month) with either £66 or £67 a month duringeach month that they are eligible for EBSS. How customers receive the grant will dependon their payment method.
BEIS, 29 July 2022
Renewable Heat Incentive: Temporary changes to wood pellets quality requirement
A BEIS consultation is inviting views on the temporary suspension of fuel qualityrequirements for wood pellets for Renewable Heat Incentive (RHI) participants. Theproposed measure applies to both the Domestic and Non-domestic RHIschemes. Consultation ends: 11 September 2022.
BEIS, 22 August 2022
New build heat standard consultation: part II
The Scottish Government are developing regulations which will, from 1 April 2024, prohibitthe use of direct emissions heating systems in new buildings: both domestic and non-domestic. The Scottish Government are now seeking stakeholder views on a number ofkey issues relating to these proposals.
Consultation ends: 20 October 2022. Scottish Government, 28 July 2022
When can green and blue hydrogen get extra RFTO certificates?
The UK Government has recently clarified the 'additionality' requirements for renewablehydrogen under the Renewable Transport Fuel Obligation (RTFO) scheme. More hydrogenprojects should now be eligible for support. Our Insight piece takes a look at the newrequirements and additionality criteria.
The Government Actuary's Department has announced it has supported the Government tohelp ratify the 2004 Protocols which increase the scope of operator liabilities in the area ofnuclear energy. The 2004 Protocols increase the scope of operator liability in terms of the:financial limits of compensation; heads of damage; geography; and period during whichpersonal injury claims can be made.
Government Actuary's Department, 19 August 2022
Marine licensing and consenting: Section 36 consent
A Scottish Government factsheet discusses the consent required for those proposing theconstruction, extension or operation of a marine-based generating station within Scottishterritorial waters or the Scottish Renewable Energy Zone.
Scottish Government, 27 July 2022
Feed in Tariffs and Contracts for Difference: proposals relating to Guarantees of Origin: Consultation outcome
In line with the responses to this consultation, the Government has decided to implementOption 3 which will repeal the availability of the green import exemptions for the Contractfor Difference and Feed-in Tariff schemes. BEIS will seek to amend the relevant legislationfor: these changes to take place and come into force from 1 April 2023 and the UKrecognition of EU Guarantees of Origin to cease from 1 April 2023.
BEIS, 27 July 2022
Ofwat issues consultation on review of the business retail market price caps
Ofwat has published a consultation on proposed changes to the retail price caps for smallerconsumption business customers (those using annual consumption below 0.5Ml) withproposals to make a single England-wide allowance, as opposed to the existing regional,price cap. Ofwat estimate that this will lead to an increase of 0.1% before inflation to anaverage metered customer bill. To reduce the risk of bill shocks for customers, Ofwat intendto introduce glidepaths that limit annual movement in the retail allowance to
around 5%before inflation. The consultation will close on 14 October 2022 and Ofwat expects topublish its final decision in December 2022, with any revisions to the Retail Exit Code totake effect from April 2023.
Ofwat, 1 September 2022
Storm overflows discharge reduction plan
DEFRA has published a storm overflows discharge reduction plan. Water companies willhave to achieve targets set out in the plan which include:
- by 2035, they will have to improve all storm overflows discharging into or near everydesignated bathing water; and improve 75% of overflows discharging to high prioritynature sites; and
- by 2050, this will apply to all remaining storm overflows covered by targets, regardlessof location.
The plan will next be reviewed in 2027.
DEFRA, 26 August 2022
Ofwat launches consultation to revise Code for Adoption Agreements
Ofwat has published a consultation proposing to issue a revised version of the Code forAdoption Agreements. Ofwat is seeking to increase the amount of time that the panel hasto make recommendation, when changing sector guidance or the model adoptionagreements, from three months to four months to better reflect the practicalities of makingthis recommendation and the administrative burdens that are placed on the panel.Comments to the consultation can be submitted until 21 September 2022.
Ofwat, 23 August 2022
Ofwat proposes modifications to strengthen the ring-fencing licence conditions of the largest undertakers
Ofwat is seeking comments on proposals to modify certain ring-fencing provisions in eachwater company’s Instrument of Appointment (licence). The proposed modifications relatepredominantly to Condition P. The consultation closes on 29 September 2022.
Ofwat, 28 July 2022