13/07/2023

Welcome to the inaugural edition of our Energy Matters Newsletter.

The energy sector is a rapidly changing market with daily updates on technological advances, regulatory reviews, policy updates, funding decisions. In each edition of our Energy Matters Newsletter, we aim to provide a user-friendly, summary update of some of the key issues we are seeing across the renewable energy and resource management sectors.

If you would like to discuss any of the issues raised, please contact a member of our energy team.

Energy Spotlight

As Net Zero Week™ is now behind us, it seems only fitting to highlight the Climate Change Committee’s 2023 report on the UK Government’s progress to date in reducing emissions.

Worryingly, the Committee’s confidence in the UK meeting its goals from 2030 “is now markedly less” than last year. The report states that while “UK greenhouse gas emissions have so far fallen 46% from 1990 levels. At COP26, a stretching 2030 commitment was made to reduce them by 68%. In only seven years, the recent rate of annual emissions reduction outside the electricity supply sector must therefore quadruple.”

It is true that we should not be too downbeat. There has been real progress but overall we are shifting through the gears when we need to be flying at hyper-speed. Each sector will have its own views on the report - my key take-away though is that concerns identified can be broadly broken down into two key macro political features:

  • Government has the right ambition and approach in a number of renewable sectors but the detailed policy/actions required to achieve that ambition is insufficient or currently absent. Sectors such as EV charging infrastructure, hydrogen, roll-out of heat pumps for example, all benefit from Government strategic support but for the market to accelerate its deployment it needs to see speedier roll-out of detailed policy and Government decision making.
  • Government policy on other Net Zero matters is confused – decisions around UK airport expansion and consents for new coal mines demonstrate inconsistencies in strategic approach to Net Zero at the highest level, resulting in a degree of confusion on how national carbon commitments are to be prioritised over other economic drivers.

The report is an extremely helpful review of the current state of Net Zero affairs in the UK and sets out a comprehensive menu of recommendations that need to be considered to ensure that we do not fail to delivery on this critical period in our Net Zero journey.

Only time (and next year’s report) will tell how the Government performs and its ability to deal with the issues faced.

As the clock continues to tick though I hold heartedly agree with Lord Deben’s mantra – “This is a period when pace must be prioritised over perfection

To read the full press release, please see: Better transparency is no substitute for real delivery.

Rupert Lugg, Partner, Energy

 

Overview Quick Links

 

 

Net Zero

Green power goals jeopardised by lack of overarching Government plan

UK Parliament | 21 June 2023

The UK Government has a challenging ambition to decarbonise the power sector by 2035 – but no overarching delivery plan exists to do so. A Public Accounts Committee (PAC) report published today finds that while the Government has many separate ongoing power decarbonisation plans, its ambitions are jeopardised by the lack of an integrated and coherent delivery plan. This should be pulled together by autumn 2023 at the latest.

 

Researchers have ‘little confidence’ that national net-zero targets will be met

edie | 8 June 2023

A new study published in the journal Science ranked the net-zero emissions targets of every country with more than 0.1% of current global greenhouse gas emissions. Targets from nations were assigned a confidence score based on whether policies were legally binding, had implementation plans in place and had short-term methods to help drive decarbonisation.

 

Carbon Capture Usage and Storage

Carbon capture, usage and storage (CCUS): business models

Department for Energy Security and Net Zero | 23 June 2023

The June 2023 update sets out the government’s updated proposals for the business model for transport and storage (TRI model).

 

Carbon capture, usage and storage (CCUS): offshore decommissioning regime for CO2 transport and storage

Department for Energy Security and Net Zero | 23 June 2023

The government’s response to the consultation has been updated. The update document provides greater detail on aspects of the decommissioning regime, in particular:

  • the treatment of onshore decommissioning costs
  • the allocation of the shortfall and windfall risks
  • the government’s consolidated proposals for repurposing assets in all circumstances
  • the expectations around holding arrangements for decommissioning funds

It also clarifies the government’s position on specific design features of the decommissioning regime, including:

  • the process for estimating the decommissioning liability
  • the treatment of decommissioning funds for shared infrastructure assets
  • the approach to investing capital that has been built in decommissioning funds

 

District Heating

Heat networks optimisation: guidance to help operators improve performance

Department for Energy Security and Net Zero | 23 June 2023

Heat network optimisation guide and template scope of works have been added.

 

Hydrogen

UK Government rethinks hydrogen levy proposal to fund research and infrastructure

edie | 26 June 2023

The UK Government is set to rule out a new levy on energy bills to fund the growth of the hydrogen sector, which has proven controversial across all major political parties.

 

Solar

VAT rules could change on battery storage when installed after solar panels

UK Parliament | 31 May 2023

In a welcome move, the Government has confirmed that it is consulting on a change to VAT on energy saving materials which could boost the capacity of householders to use solar energy to power their homes.

 

‘Untapped potential’ of commercial buildings could revolutionise UK solar power

Department for Energy Security and Net Zero | 26 May 2023

Schools, warehouses and car parks could be at the forefront of a revolution in affordable solar power, under plans discussed at the first meeting of the government’s new Solar Taskforce.

The government has a clear target to increase solar capacity by nearly fivefold to 70GW by 2035 as part of wider plans to power up Britain with cleaner, cheaper and more secure energy sources. Even when this is met, the UK would be using only a very small proportion of its land mass for solar panels.

 

Battery Storage

Bank commits £62.5 million in major project to boost UK energy storage capacity

UK Infrastructure Bank | 23 May 2023

The UK Infrastructure Bank has announced its first debt transaction in battery storage with a £62.5 million commitment to support the development of multiple new energy storage and grid stability facilities across the UK.

 

Onshore and Offshore Wind

UK's offshore wind pipeline grows, but RenewableUK warns of global competition

edie | 12 June 2023

The UK’s offshore wind pipeline has reached almost 98GW – up from 91GW this time last year. But RenewableUK is warning policymakers not to be complacent, as China and the US forge ahead with their own renewable energy expansions.

 

Briefing note: Developing local partnerships for onshore wind in England

Regen | 12 June 2023

Insights for local authorities and community organisations: how to respond to the current consultation on developing local partnerships for onshore wind in England.

 

Deep Geothermal

UK switches on its first deep geothermal plant for 37 years

Power Technology | 19 June 2023

Eden Geothermal is the UK’s first operational deep geothermal project to come online in 37 years. There are hopes that this project will bolster the case for serious use of deep geothermal energy, despite its relatively high costs.

 

Dig Deep: Opportunities to level up through deep geothermal heat & energy on the way to net zero

Dr Kieran Mullan | 2 June 2023

Developing a network of geothermal energy plants could help the UK improve its energy security while also delivering levelling up, a Government-commissioned report has concluded.

It identifies 45 locations across the UK suitable for the development of deep geothermal energy infrastructure. Almost half (44%) of these locations fall within the UK Government’s top 100 places to prioritise in levelling up. Six of them fall within the Government’s top ten – Redcar and Cleveland; Middlesborough; East Lindsey; Hartlepool; Northumberland, and Bassetlaw.

 

Waste Management

The government's resources and waste reforms for England

National Audit Office | 30 June 2023

This report examines whether the Department for Environment, Food and Rural Affairs (Defra) is on track to achieve its resources and waste ambitions in a way that represents value for money.

It assesses:

  • whether government has effective plans to achieve its resources and waste ambitions
  • whether Defra is on track to successfully implement its main programme, the collection and packaging reforms

Also see: Waste management: data visualisation

 

Defra warned EPR facing 'significant hurdles' as 'lobbying' ramps up

letsrecycle.com | 13 June 2023

The UK’s extended producer responsibility (EPR) scheme is facing “significant hurdles” as producers do not have access to the recycled materials needed, the chief executive of the Food and Drink Federation has warned.

 

EfW operators form ‘alliance’ to promote industry

letsrecycle.com | 13 June 2023

Five of the biggest energy from waste (EfW) plant operators have launched an alliance called Resource Recovery UK (RRUK) to “advocate for the role of the industry in resource efficiency, sustainable growth, and decarbonisation”.

 

Net Zero Cities

Carbon Offsetting and Pricing Guidance

UK Green Building Council | 27 June 2023

In March 2021, UKGBC published the Renewable Energy Procurement and Carbon Offsetting Guidance for Net Zero Carbon Buildings. Now two years on, the landscape in which the initial carbon offsetting guidance was published has evolved significantly.

This report aims to provide comprehensive guidance on voluntary carbon offsetting and pricing strategies that are specifically tailored for built assets (both new and existing) and to better equip those who purchase offsets or make investment decisions at building asset or organisational level to align with their climate goals and accelerate the wider transition of net zero.

 

Electric Vehicle Infrastructure

UK Auto calls for industrial strategy to secure £106 billion EV prize

Society of Motor Manufacturers and Traders | 27 June 2023

Launching “Manifesto 2030: Automotive growth for a zero emission future” at its annual International Summit in London, the Society of Motor Manufacturers and Traders (SMMT) called on every party to recognise the strategic importance of the sector to the UK and create the conditions for a 10-fold rise in annual battery electric vehicle (BEV) production to more than 750,000 units per year by 2030. This would equate to a cumulative £106 billion worth of products at factory gate.

 

Industry

Future of the Industrial Energy Transformation Fund

Department for Energy Security and Net Zero | 26 June 2023

We’re seeking views on the future role of the Industrial Energy Transformation Fund (IETF) and the final design of Phase 3, which will help industry to improve energy efficiency and reduce carbon emissions. This consultation closes at 11:59 pm on 21 July 2023.

 

Electricity

Capacity Market auction determination: letter from DESNZ to National Grid ESO, June 2023

Department for Energy Security and Net Zero | 16 June 2023

Letter setting out the government’s intent to hold 2 Capacity Market auctions in 2024: the T-1 auction for 2024 to 2025 and T-4 auction for 2027 to 2028.

 

Capacity Market 2023: strengthening security of supply and alignment with net zero

Department for Energy Security and Net Zero | 12 June 2023

The government’s response to the consultation has been published. They aim to take the proposals forward in 2 phases:

  • they will now seek to lay legislation in Parliament to amend the Capacity Market Rules and Electricity Capacity Regulations in order to implement the proposals from phase 1
  • they intend to undertake a further phase of analysis of the remaining proposals prior to a final decision on implementation in phase 2

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If you would like to discuss any of the issues raised, please contact a member of our energy team.

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