Welcome to our monthly Energy Update, bringing you links to the major developments relevant to the industry.

This month we cover the UK EV Infrastructure Strategy, expanding the UK ETS, the Green Heat Network Fund, a case on whether providing export finance for a LNG project in Mozambique breached the Paris Agreement, offshore energy developments and much more.

Capacity Market
EMR Delivery Body publishes final results of T-4 Capacity Auction for 2025–2026

The EMR Delivery Body has set out the final results of the T-4 Capacity Auction for delivery year 2025–2026. It states that 42,364.314 MW is procured across 574 CMUs and a clearing price of £30.59. AG comment: This is a record high price for capacity, reflecting uncertainty in the energy market and the reduction in fossil fuelled generation plants. But the higher number of battery storage plants winning capacity contracts is a good sign.
EMR Delivery Body, 4 March 2022

Contracts for Difference
Feed-in Tariffs and Contracts for Difference schemes and Guarantees of Origin

A Department for Business, Energy and Industrial Strategy (BEIS) consultation seeks opinions on the removal of Feed in Tariff (FIT) and Contracts for Difference (CfD) scheme cost exemptions for green imported electricity and the recognition of EU Guarantees of Origin. Consultation ends: 10 May 2022.
BEIS, 29 March 2022

Electric Vehicles
UK electric vehicle infrastructure strategy

The Department for Transport (DfT) has published its vision and action plan for the rollout of electric vehicle charging infrastructure in the UK, ahead of the phase out dates. DfT intends to end the sale of new petrol and diesel petrol and diesel vehicles by 2030 and ensure that all new cars and vans to be fully zero emission at the tailpipe by 2035.
DfT, 25 March 2022

Ofgem guide: Taking charge: selling electricity to electric vehicle drivers

A guide published by Ofgem sets out the eight charging models they have encountered when supplying electricity for EV charging and clarifies what rules apply. It does not cover technical standards or network connections, but does provide links to other helpful resources.
Ofgem, 9 March 2022

Emissions Trading
Government consults on expanding the UK Emissions Trading Scheme 

The UK Emissions Trading Scheme Authority (UK ETS), made up of the UK government, Scottish Government, Welsh Government and the Department of Agriculture, Environment and Rural Affairs in Northern Ireland is seeking stakeholder views on proposals to develop the UK ETS which launched in Great Britain on 1 January 2021.

The proposals include expansion of the UK ETS to include:

  • upstream oil and gas venting; 
  • transportation of CO2 through other forms of non-pipeline transport e.g.) carbon capture, utilisation and storage (CCUS);
  • biomass;
  • domestic maritime from mid 2020s; and
  • waste and energy-from-waste from mid to late 2020s.

The consultation also sets out proposals for changes to align the UK ETS cap and trajectory with the Government's net zero target.

The consultation closes on 17 June 2022.
Department for Business, Energy & Industrial Strategy, (BEIS), March 2022

Energy Efficiency
Home energy efficiency equity loan pilot

The Scottish Government has published an analysis of responses to the Home Energy Efficiency Equity Loan Pilot: homeowner feedback survey and the Home Energy Efficiency Equity Loan Pilot: call for evidence on potential national rollout, which form part of the suite of support schemes for the decarbonisation of Scottish homes.
Scottish Government, 14 March 2022
Scots Law

Independent Assessment: The UK's Heat and Buildings Strategy

A Climate Change Committee report advises the UK Government on amendments to its Heat and Buildings Strategy which sets out important high-level decisions on the UK's approach to reducing emissions from heating buildings.
Climate Change Committee, 9 March 2022

Consultation outcome: Combined heat and power: pathway to decarbonisation

A BEIS publication sets out the responses to its consultation to inform the further development of possible options for future reform of combined heat and power (CHP) policy.
BEIS, 28 March 2022

DHRI closure and the Boiler Upgrade Scheme

BEIS has issued a notice regarding the closure of the Domestic Renewable Heat Incentive (DRHI) scheme on 31 March 2022 and the new Boiler Upgrade Scheme (BUS) which will continue to support the deployment of low carbon heat technologies once it launches. 
BEIS, 4 March 2022

£288 million fund opens for green heating projects

An overview of the capital grant support, which is available over the next three years, under the new Green Heat Network Fund for the development of new and existing low and zero-carbon heat networks in England, including details of how to apply.
BEIS, 4 March 2022

Ofgem consultation: Hydrogen village trial detailed design studies 

Ofgem have launched a consultation on its decision to fund detailed design studies on delivering a hydrogen heated village by 2025. Consultation ends: 11 April 2022.
Ofgem, 16 March 2022

UKEF allowed significant margin of appreciation in assessing climate change impacts of projects

An application for judicial review was dismissed by the High Court concerning a decision of the Export Credits Guarantee Department (UKEF) about the factors to consider when making a decision to provide export finance to support a liquified natural gas (LNG) project in Mozambique. The court stated that UKEF should be afforded a significant margin of appreciation as it was the first UK government department to conduct an exercise of assessing climate change in the context of a long-term foreign project and at the time there was no established or internationally recognised methodology for evaluation.

The court considered the Paris Agreement and the application of Article 2(1)(c) which looks to make finance flows consistent with a pathway towards low greenhouse gas (GHG) emissions and climate-resilient development. It also considered the reporting of Scope 3 emissions which would result from the use of the LNG and calculations should be taken into account when making a financing decision. 
Bailii, Friends of The Earth Ltd, R. (On the Application Of) v The Secretary of State for International Trade Export Credits Guarantee Department (UK Export Finance) & Anor [2022] EWHC 568 (Admin) (15 March 2022)

Net Zero
Energy security plans: letter to UK Government

The Scottish Net Zero and Energy Secretary Michael Matheson has published a letter sent to the Secretary of State for Business, Energy and Industrial Strategy Kwasi Kwarteng detailing seven key asks to accelerate the transition to net zero.
Scottish Government, 18 March 2022
Scots Law

The UK Nuclear Energy (Financing) Bill 2022 and the RAB Model

It's been nearly two years since the UK government consulted on a possible regulated asset base (RAB) model to support future nuclear power plant projects. We reported on this in our Insight, Net Zero needs the nuclear option. Now we have the Nuclear Energy (Financing) Bill going through Parliament, but is it any clearer how the model will work? Read our analysis.

Enhancing the UK’s Nuclear Third-Party Liability Regime

BEIS have published a notice regarding changes to the Nuclear Third-Party Liabilities (NTPL) framework. The UK ratified changes to the Nuclear International Third-Party Liabilities (NTPL) framework through the 2004 Protocols of the Paris Convention on Nuclear Third-Party Liability and the Brussels Supplementary Convention on Nuclear Third-Party Liability (Paris-Brussels). These changes came into effect on 1 January 2022 and have enhanced the regime, offering further protection to victims and increasing the minimum amount nuclear operators will have to pay in the unlikely event of a nuclear accident.
BEIS, 4 March 2022

Offshore Energy
The Oil and Gas Authority (Levy and Fees) Regulations 2022 (SI 2022/204)

The purpose of this instrument is to impose a levy on licensees who hold offshore petroleum licences in order to fund the carrying out of certain functions by the Oil and Gas Authority in respect of the period running from 1 April 2022 to 31 March 2023. Part 3 revises existing fee rates. In force: 1 April 2022
Explanatory Memorandum

North Sea Transition Deal: One Year On

A BEIS publication emphasises current the progress made across a number of areas in the North Sea Transition Deal between the Government and the offshore oil and gas industry. This includes reducing production emissions by 11%, supporting the development of carbon capture, and setting out a hydrogen strategy for the UK.
BEIS, 21 March 2022

Oil and Gas Authority changes name to North Sea Transition Authority

The Oil and Gas Authority has changed its name to the North Sea Transition Authority (NSTA) to reflect its evolving role in the energy transition.
NSTA, 21 March 2022

Ofgem publishes revised guidance on cost assessment process for offshore transmission

Ofgem has published updated guidance setting out the cost assessment process for offshore transmission. Updated in January 2022, the revised version is intended to determine the transfer value for offshore electricity transmission projects developed and constructed by developers. It describes Ofgem's approach for determining the economic and efficient costs of offshore Transmission Assets and provides developers with an overview of the information required.
Ofgem, 17 March 2022

BEIS consults on SEA environmental report on UK offshore energy

BEIS is conducting a Strategic Environmental Assessment (SEA) of a draft plan/programme for further leasing for renewable energy (offshore wind, wave and tidal technologies), further licensing for offshore oil and gas exploration and production, and further leasing/licensing for hydrocarbon gas storage and unloading, carbon dioxide transportation and storage, and the offshore production and transport of hydrogen. The SEA Environmental Report is being subject to consultation with the relevant consultation bodies and the public. The Department will consider comments received from the consultation in making their decision on the adoption of the draft plan/programme. The consultation closes on 27 May 2022. 
BEIS, 17 March 2022

Guidance on alternative supply operations 2022

Guidance from the Drinking Water Inspectorate (DWI) demonstrates the DWI's expectations on alternative supply operations and the actions water companies must take when providing supplies from tankers, bowsers or Arlington tanks for human consumption. The Security and Emergency Measures (Water and Sewerage Undertakers) Direction 2022 covers alternative water supply requirements and the associated guidance.
DWI, 21 March 2022

Decision under section 12A of the Water Industry Act 1991 to modify condition C of English water companies' licences

States the reasoning to modify condition C of the Instrument of Appointment (licence) of each water company wholly or mainly in England (English companies), under section 12A of the Water Industry Act 1991. Ofwat will make the changes from 31 March 2022. The effect of this will be that the cap imposed by condition C on the level of infrastructure charges no longer applies to English water companies and their level of infrastructure charges will be solely regulated by the requirements of the charging rules.
Ofwat, 17 March 2022

Letter to CEOs on Environment Act duties

On 1 March 2022, Ofwat interim chief executive David Black wrote to water company chief executives, calling on them to submit plans on how they will cut the harm they cause to rivers in England. The Environment Act 2021 will put new duties on water companies to reduce environmental and public health harm from the use of storm overflows.
Ofwat, 1 March 2022

Key Contacts

Richard Goodfellow

Richard Goodfellow

Head of IPE and Co-head of Energy and Utilities
United Kingdom

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Anna Sweeney

Anna Sweeney

Principal Knowledge Lawyer, Projects & Infrastructure

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