Energy Eye – July 2015

This update contains brief details of Government and EU publications, legislation, cases and other policy developments in England and Wales relevant to those interested in energy, renewables, energy efficiency and the alternative energy sector, which have been published in the past month.

Items are set out by subject, with a link to where the full document can be found on the internet. All links are correct at the date of publication.

If you have been forwarded this update by a colleague and would like to receive it direct please email Claire Booth.

The following topics are covered in this update:

Carbon Capture and Storage	Finance
Competition	Heat Networks
Electricity Market Reform	Renewable Heat
Energy Efficiency	Wind Energy
Energy Policy

Carbon Capture and Storage

LSE: Bridging the gap – Improving the economic and policy framework for carbon capture and storage in the European Union: this report concludes that EU countries need to significantly increase investments in carbon capture and storage (CCA) and show much greater urgency and determination to develop and deploy CCS technology. The report estimates that an investment of between €18bn - €35bn is needed for the installation of 11GW of electricity generation with CCS by 2030, as laid out by the European Commission’s Energy Roadmap. However, EU policies have so far provided only €1.3bn for the development of the technology, and few Member States have put forward incentives to support it. The authors call on the EU to create a new strategy to increase ambition and accelerate action in the Member States. They recommend that both the public and private sectors should provide stronger support for carbon capture and storage. (16 June 2015)

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Competition

CMA:  Energy market investigation – Summary of provisional findings report: sets out the CMA's provisional findings after a comprehensive year-long investigation into the energy market. It highlights a range of problems hindering competition in the market, including the extent to which consumers are engaged in the market and shortcomings in regulation and the ability to deliver change across the market. It also points to the need for a coherent and transparent approach to responsibilities and policy implementation by those overseeing the industry. Further details of the investigation, along with supporting documents, are on the CMA's web page. (7 July 2015)

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Electricity Market Reform

DECC: Electricity market reform – Contracts for Difference: Government response to the consultation on changes to the CFD Contract & CFD Regulations: sets out the Government's response to the March 2015 consultation on legislative changes to the CfD Contract, Contracts for Difference (Allocation) Regulations 2014, the Contracts for Difference (Standard Terms) Regulations 2014 and the Contracts for Difference (Definition of Eligible Generator) Regulations 2014. 
Alongside this response, DECC has published Negative pricing in the GB wholesale electricity market by Baringa Partners LLP that analyses the potential future incidence of negative prices in the GB electricity market, and to provide insights on the causes, implications and drivers of negative pricing. (29 June 2015)
See: the Contracts for Difference (Standard Terms) (Amendment) Regulations 2015 (SI 2015/1425), in force 20 July 2015, that amend SI 2014/2012 to allow payments to generators under a Contract for Difference to be suspended under negative price conditions, and to enable the Secretary of State to amend the Standard Terms Notice issued at the beginning of each Allocation round.

DECC: Capacity Market – Frequently Asked Questions (FAQs) 2015 Issue # 1: these FAQs address queries raised by stakeholders to date. They FAQs are for information only and do not supersede or replace the requirements contained in The Capacity Market Rules and The Electricity Capacity Regulations. (29 June 2015)

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Energy Efficiency

Welsh Government: The development of an energy efficiency strategy for Wales: seeks views on a draft Energy Efficiency Strategy for Wales that will drive actions to deliver against the goals set out in the Wellbeing of Future Generations (Wales) Act 2015: tackling poverty and the global threat of climate change, building resilience for communities, boosting green growth in the economy and addressing the health inequalities caused by poor energy efficiency. Besides addressing energy issues such as affordability, security of energy supply and the need for decarbonisation, the strategy is designed to play a major role in driving economic growth. The consultation closes on 9 September 2015. (17 June 2015)

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Energy Policy

DBIS: Fixing the foundations – Creating a more prosperous nation: sets out a 15-point plan that the Government will put into action to boost the UK’s productivity growth, centred around two key pillars: encouraging long-term investment, and promoting a dynamic economy. On energy, it states that the Government:

• is committed to attracting much-needed investment in energy infrastructure and production, ensuring security of supply whilst promoting competition in energy markets and networks to keep bills as low as possible;
• will seek to meet the UK’s climate change commitments cost-effectively, including promoting innovation to make a cost-effective transition to a low carbon economy; 
• aims to improve productivity in energy regeneration, production, supply and usage by developing the shale industry, strengthening the role for competitive markets, reforming the oil and gas fiscal and regulatory regime, continuing decarbonisation of the energy sector, seeking to ensure EU energy policy supports affordable and secure energy for the UK, and delivering a significant expansion in new nuclear power;
• is conducting a review of business energy tax policy to improve and simplify the landscape;
• does not intend to proceed with the zero carbon Allowable Solutions carbon offsetting scheme, or the proposed 2016 increase in on-site energy efficiency standards, but will keep energy efficiency standards under review, recognising that existing measures to increase energy efficiency of new buildings should be allowed time to become established.

The Government will publish a new long-term National Infrastructure Plan for key economic  infrastructure sectors – transport, energy, flood defences, water, waste,  communications and science – supported by annual progress updates and underpinned by the Infrastructure Pipeline, which will be published on a regular basis, with an update this summer. (10 July 2015)

DECC: Clear priorities for DECC: the new Energy and Climate Change Secretary, Amber Rudd, sets out how DECC plans to meet its objectives of keeping bills as low as possible for hardworking families and businesses and powering the economy while decarbonising in the most cost-effective way. (9 July 2015)

Green Alliance: What new spending reductions could mean for DECC: this report demonstrates the impact of proposed departmental spending reductions on the Government’s ability to deliver its planned energy reforms and climate policy. The analysis reveals how large historic liabilities from the nuclear and coal industries, a commitment to protect capital expenditure and the 'roller coaster' effect of applying spending reductions early on in the parliament could combine to reduce DECC's budget by half by 2017-18; and its resource budget, which pays for programmes and staff, could fall 90 per cent by 2018-19. It argues that these reductions would have a major impact on DECC staffing, innovation research and energy efficiency spending. (3 July 2015)

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Finance

DBIS: The future of the Green Investment Bank: speech by the business Secretary Sajid Javid on plans to support the world-leading Green Investment Bank by moving it into the private sector. (25 June 2015)

HM Treasury: Summer Budget 2015: the Chancellor has presented his first Budget following the May general Election. Points of interest for the energy sector:

• removal of the Climate Change Levy exemption for renewably sourced electricity from 1 August 2015 – see also HMRC's tax information and impact note: Climate Change Levy: removal of exemption for electricity from renewable sources; 
• review of the business energy efficiency tax landscape and consider approaches to simplify and improve the effectiveness of the regime. A consultation will be launched in autumn 2015; 
• proposals to extend competitive tendering to onshore electricity network transmission assets, saving consumers around £390m over the next 10 years;
• the Government will continue to promote the low carbon investment and innovation needed to support global action on climate change, focusing on the best value for money policies to keep costs down for consumers; 
• the Government will continue to push for a global climate deal later this year that keeps the goal of limiting global warming to 2 degrees firmly within reach; 
• the Government will work to increase switching in energy markets, as part of wider work to promote competition. To help enable this, the Government aims to introduce 24 hour switching by the end of 2018 and will also act to improve trust in the switching process;
• expansion of the North Sea investment and cluster area allowances to include additional activities which will maximise economic recovery; 
• proposals for a sovereign wealth fund for communities that host shale gas development.

(8 July 2015)

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Heat Networks

DECC: Heat networks delivery funding: announces the names of the successful local authorities in Round 4 of the Heat Networks funding, together with the amount awarded. There is also a map of successful HNDU Rounds 1-4 authorities. This completes the fourth funding round; there are no open funding rounds at the moment. (2 July 2015)

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Renewable Heat

DECC: Renewable Heat Incentive – Introduction of the Ecodesign of Energy-related Products Directive: this policy document outlines the effects of the introduction of the Ecodesign of Energy Related Products Directive 2009/125 (ErP) and the Energy Labelling Directive 2010/30 for heat pumps. These implement a new standard methodology for calculating the efficiency of heat pumps, set a minimum performance criteria, and introduce a product and system label that display the energy efficiency of the product. (6 July 2015)
See also: Renewable Heat Incentive Scheme and Domestic Renewable Heat Incentive Scheme (Amendment) (No. 2) Regulations 2015 (SI 2015/1459), in force on 27 July and 26 September 2015, that make a number of changes to the RHI Scheme, including implementing the ErP.

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Wind Energy

DECC: Ending new subsidies for onshore wind: Written Statement by the Secretary of State Amber Rudd setting out proposals to end new subsidies for onshore wind, specifically in relation to the Renewables Obligation (RO). She announces that the Government will be introducing primary legislation to close the RO to new onshore wind from 1 April 2016. (18 June 2015) 

DCLG: Giving local people the final say over onshore wind farms: announces changes to planning rules so that when considering a planning application for wind turbines in their area, councils should only grant permission if the site is in an area identified as suitable for wind energy as part of a Local or Neighbourhood Plan and, following consultation, the planning impacts identified by affected local communities have been fully addressed and therefore have their backing. (18 June 2015)

The Government has since introduced the Energy Bill into Parliament, implementing these proposals. The Bill will give local people a greater say on wind farm applications and closes the Renewables Obligation scheme to new onshore wind from April 2016. (9 July 2015)

RenewableUK: Our offshore energy future – Actions for growth: this document makes a case to Government to continue its support for offshore wind, outlining specific actions that Ministers could take to ensure expansion. The report highlights a series of key achievements; however, it also warns that the UK’s offshore wind industry will be unable to reach its full potential without supportive Government policies. (24 June 2015)

DECC: Information on the proposed  RO grace period for new onshore wind: further information on the Secretary of State’s announcement to Parliament on 18 June confirming the Government’s intention to close the RO early to new onshore wind and outlining proposals for a grace period. (7 July 2015)

Broadview Energy Developments Ltd v Secretary of State for Communities and Local Government [2015] EWHC 1743 (Admin) (Admin Ct): BED, a wind farm developer, applied to quash the Secretary of State's dismissal of its appeal against the Council's refusal of planning permission for a wind farm. The local MP had lobbied against wind farms generally and had both written to the Secretary of State and had meetings with him. BED contended that the Secretary of State's decision was taken in breach of natural justice, as its failure to disclose this correspondence and lobbying gave rise to actual or apparent bias on the part of the Secretary of State and in breach of his own guidance.
The court held, refusing the application, that BED had failed to establish that the ministerial decision against planning permission for its proposed wind farm was unlawful, through unfairness, bias or material breach of planning propriety standards. Fair-minded and informed observers would conclude that there was no real possibility of ministerial bias in this case. Ministers were lobbied by MPs about constituency issues, through correspondence and through informal encounters on the Parliamentary estate. This was part of our Parliamentary democracy and generally there could be no lawful objection to it. There was nothing unlawful in Ministers being lobbied by an MP on a constituency planning matter so long as Ministers acted fairly and consistently with the standards of propriety. The MP had acted perfectly properly, as a diligent constituency MP. The planning inspector had considered that the matter was finely balanced and the MP was lobbying assiduously, and openly, against the proposed wind farm on behalf of her constituents. (19 June 2015)

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