01/12/2023
Welcome to our November Energy Matters Newsletter.
The energy sector is a rapidly changing market with daily updates on technological advances, regulatory reviews, policy updates and 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 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
It’s been a busy month in the energy sector with the Chancellor announcing a number of measures aimed at boosting green industries in his Autumn Statement.
Encouragingly the government has committed to £960 million for a Green Industries Growth Accelerator aimed at supporting the expansion of strong, home-grown, clean energy supply chains across the UK, including carbon capture, utilisation and storage, electricity networks, hydrogen, nuclear and offshore wind.
Perhaps more crucially though, Ofgem announced its policy to clear ‘zombie projects’ from the electricity grid connection queue and cut waiting times. This announcement has been eagerly anticipated across the energy sectors. A staggering number of renewable energy projects are on hold because they are unable to achieve a grid connection, or have been told they face a 10 – 15 year wait. If the UK wants to achieve its aim of transitioning to a net zero economy this is a major challenge which needed to be overcome.
The changes will see the National Grid change from a ‘first-come, first-served’ approach, (which according to Ofgem’s own statistics have led to a queue of energy projects which could generate almost “400GW of electricity – well in excess of what is needed to power the entre British energy system”) to move to a first-ready approach. The changes will terminate projects which have stalled, to allow projects which are ready to be fast tracked.
Inevitably this will have important ramifications for all stakeholders in all energy projects. Issues of commercial risk allocation between parties will need to be revisited. It will also be interesting to see if there is increased viability for energy projects which include battery storage, or are private wire agreements which avoid connection to the grid altogether. The full effects of the change remain to be seen but any actions which help to clear the queue will be a significant step in the right direction.
Overview Quick Links
- Net Zero
- District Heating
- Hydrogen
- Carbon Capture Storage / Usage
- Battery Storage
- Onshore / Offshore Wind
- Electric Vehicles
- Energy From Waste
- Contracts for Difference
Net Zero
Ofgem | 13 November
New rules to speed up electricity grid connections for viable projects and allow stalled or speculative developers to be forced out of the queue have been announced by Ofgem.
New laws passed to bolster energy security and deliver net zero
Gov.UK | 26 October
The biggest piece of energy legislation in the UK’s history has become law, laying the foundations for an energy system fit for the future. The Energy Act 2023 is intended to transform the UK’s energy system by strengthening energy security, supporting the delivery of net zero and ensuring household bills are affordable in the long-term.
District Heating
Apply for the Heat Network Efficiency Scheme (HNES) Round 6
Department for Energy Security and Net Zero | 13 November 2023
Round 6 is now open. Public, private and third sector applicants can apply for funding to support sub-optimal district heating or communal heating projects. Applications should be submitted by 2 February 2023.
Thousands of homes to be kept warm by waste heat from computer data centres in UK first
Department for Energy Security and Net Zero | 3 November 2023
More homes and businesses to benefit from cleaner, low-cost heating - thanks to almost £65 million in government support for 5 green energy projects.
Green Heat Network Fund (GHNF): guidance on how to apply
Department for Energy Security and Net Zero | 3 November 2023
Round 7 is now open. It closes to applications on 23 February 2024. The government have updated the guidance for applicants.
Apply for Heat Pump Ready Programme: Stream 2 – Wave 2 opportunities
Department for Energy Security and Net Zero | 23 October 2023
The programme supports the development and demonstration of heat pump technologies and tools, and solutions for optimised deployment of heat pumps.
Hydrogen
Balance of power: Is green hydrogen the missing link in pollution-free fuels? - AirQualityNews
Air Quality News | 15 November 2023
Can the most abundant element in the universe be used as a propellant for heavy vehicles and off-grid gas replacement? Martin Guttridge-Hewitt explores the emerging hydrogen market to better understand costs, emissions, and access.
New guide shows how to scale up UK’s green hydrogen industry
RenewableUK | 1 November 2023
RenewableUK has published a new guide, “Demystifying the Hydrogen Business Model for Electrolysis”, which aims to explain to investors and policy makers how the Government’s Hydrogen Production Business Model works, the challenges which come with it and the reforms which are necessary to ensure the UK can rapidly deploy the first tranche of major green hydrogen projects needed to catalyse cost reduction.
Proposals for hydrogen production and industrial carbon capture regulations
Department for Energy Security and Net Zero | 30 October 2023
This government response confirms its intention to proceed with our proposals largely as consulted on having considered feedback from respondents.
- Direction to offer to contract: Setting out the process by which the Secretary of State may direct a counterparty to offer to contract, including the power for the Secretary of State to revoke a direction that has been issued
- Information publication: Requiring a counterparty to publish each contract entered into and establish a public register containing key project information
- Counterparty ability to carry out its functions: Requiring a counterparty to provide early notification to the Secretary of State if it is, or considers that it is likely to be, unable to fulfil its functions
- Low carbon hydrogen producer eligibility: Supporting new production facilities as well as new production capacity added to existing facilities. Projects will be required to demonstrate the ability to meet the ‘live’ UK Low Carbon Hydrogen Standard at the time of their application
- Carbon capture entity eligibility: Supporting CO2 capture from industrial and commercial sources, including from combined heat and power and energy recovery generating stations, but excluding capture of CO2 produced from other types of power generation facility
The government says it intends to deliver these regulations as soon as departmental and Parliamentary timelines allow, enabling business model contracts to be awarded.
UK Low Carbon Hydrogen Certification Scheme
Department for Energy Security and Net Zero | 27 October 2023
The government response confirms the commitment to launch a scheme from 2025 to aid in the decarbonisation of the UK economy and support the ambition to reach Net Zero by 2050.
The scheme will:
- be based on the Low Carbon Hydrogen Standard
- be initially voluntary
- aim to be UK-wide
- use a mass balance chain of custody
The government intends to appoint the Low Carbon Contracts Company (LCCC) as its delivery partner.
It will publish a pathway to international alignment ahead of launching the scheme.
Consultation response: Hydrogen blending into the GB gas distribution network
26 October 2023 | The UK government is consulting on the role of hydrogen blending into the GB gas distribution networks. Regen highlights that there are better options to build the hydrogen value chain.
Carbon Capture Usage / Storage
UK sued for counting wood burning with carbon capture as ‘negative emissions’
Edie |15 November 2023
Environmental groups are taking the UK government to court over plans to spend billions on Biomass with Carbon Capture and Storage (BECCS), a technology aimed at removing CO2 that is also being promoted by the European Union.
Battery Storage
Bank investment provides significant boost to UK battery storage sector
UK Infrastructure Bank | 3 November 2023
The UK Infrastructure Bank has announced a £60million loan to support Pacific Green in its development of a new 249 MW / 373.5 MWh electricity storage park in Kent.
Onshore / Offshore Wind
Relief as government confirm increased administrative strike prices for offshore wind
Regen | 16 November 2023
The government’s announcement that the administrative strike prices (ASPs) for offshore wind will be increased for the government’s sixth Contracts for Difference (CfD) allocation round (AR6) will be greeted with a collective sigh of relief within the industry and should be an encouragement to supply chain investors.
Boost for offshore wind as government raises maximum prices in renewable energy auction
Department for Energy Security and Net Zero | 16 November 2023
The government has increased the maximum price for offshore wind projects in its flagship renewables scheme to further cement the UK as a world leader in clean energy.
Following an extensive review of the latest evidence, including the impact of global events on supply chains, the government has raised the maximum price offshore wind and other renewables projects can receive in the next Contracts for Difference (CfD) auction to ensure it is performing effectively.
The CfD scheme ensures renewable energy projects receive a guaranteed price from the government for the electricity they generate, encouraging continued investment in the UK - which is already home to the world’s 5 largest operational offshore wind farm projects and has increased electricity generation from renewables from 6% in the first quarter of 2010 to 48% in the first quarter of this year.
The maximum strike price has been increased by 66% for offshore wind projects, from £44/MWh to £73/MWh, and by 52% for floating offshore wind projects, from £116/MWh to £176/MWh ahead of Allocation Round 6 (AR6) next year.
Transmission license exemption for array systems connecting to offshore substations
Department for Energy Security and Net Zero | 13 November 2023
This consultation seeks views on a proposed exemption from the requirement to hold a transmission licence for array systems connecting an offshore windfarm to an offshore substation. The government is seeking in particular the views of offshore wind generators, offshore transmission owners, renewable energy trade associations and offshore wind industry representatives. The deadline to respond is 9 January 2024.
Electric Vehicles
80% of charge points installed in the last three months were in London and the South East
Air Quality News | 6 November 2023
The latest figures from the Society of Motor Manufacturers and Traders (SMMT) have revealed a significant increase in charge point installations in the third quarter of the year, which they say has ‘improved significantly relative to new plug-in car uptake’.
Liverpool City Region to invest £10m in expanding electric vehicle charging
Air Quality News | 31 October 2023
Steve Rotheram, the Liverpool City Region Mayor has today announced today that more than £10m is being provided to increase the number of electric vehicle charging points in the region.
Energy from Waste
Pyrolysis EfW plant set for Humberside chemicals site
7 November 2023 | Standard Gas is set to instal the first of its SG100 pyrolysis energy-from-waste plants at Humberside’s Saltend Chemicals Park, under an agreement with the site’s owner and operator PX Group.
EfW firm dismisses 'vexatious' patent challenge
MRW | 6 November 2023
Powerhouse Energy Group has dismissed a patent claim made against it as “without merit and vexatious”. The action has been launched by Carlisle-based GetGo Recycling, of which Powerhouse said it had no knowledge or previous dealings.
Contracts for Difference (CfD)
Introducing a Contracts for Difference (CfD) Sustainable Industry Reward
Department for Energy Security and Net Zero | 16 November 2023
The Department for Energy Security and Net Zero is consulting on the Contracts for Difference (CfD) Sustainable Industry Reward (SIR) which aims to accelerate deployment of low carbon electricity generation through offshore/floating offshore wind. The CfD SIR would be introduced from CfD Allocation Round 7 onwards, and could replace Supply Chain Plans (SCPs) for offshore wind and floating offshore wind temporarily. Existing SCPs would continue to be monitored and enforced. The consultation seeks views on the model to deliver the CfD SIR and the type of factors that could be valued under it. Responses can be submitted until 11.59 pm on 11 January 2024.
If you would like to discuss any of the issues raised, please contact a member of our energy team.
