Net Zero UK

The action will require the UK to reduce net greenhouse gas emissions to nothing over the next 30 years. This is a more ambitious target than the previous, which was at least an 80% reduction from 1990 levels.

The decision follows the Net Zero report, by the Committee on Climate Change (CCC), which was commissioned by the government to reassess the UK’s long-term emissions targets. The report recommended the 2050 net zero target for the UK, while issuing a 2045 target for Scotland and a 95% reduction in greenhouse gases by 2050 for Wales.

Representatives of the Scottish and Welsh governments have already announced intentions for the nations to aim for these targets, with the Welsh government aiming to go further than the CCC advice; targeting net zero emissions no later than 2050.

Is this achievable?

The report by the Committee on Climate Change states that the net zero target is possible with known technologies, alongside behavioral and societal changes in people’s lives. The organisation has forecast that that the target is also within the expected economic cost that Parliament accepted when legislating the previous 2050 target under the Paris Agreement.

The report does come with the caveat that net zero is only possible if clear, sensible and well-designed policies to enable reductions in emissions are introduced across the country in a strict timeline. The CCC highlights that current policy would not meet even the previous target.

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Our Market Intelligence team keep a close eye on the energy markets and industry updates. For the most timely updates you can find us on Twitter and LinkedIn Follow us today.

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Celebrating TELCA success

We’re delighted to announce that EIC’s Flexible Account Manager, Becky Knowles, scooped the award for Secret Star at The Energy Live Consultancy Awards (TELCAs) 2019 last night.

The ceremony held at the Institute of Engineering and Technology followed by an after party aboard the Silver Sturgeon, is an annual event celebrating the premier consultants and experts in the Energy Industry.

Secret Star nomination

Becky was nominated due to her exceptional customer service and excellent industry knowledge. As an integral part of the Flexible Account Team, Becky regularly goes above and beyond expectations for clients and colleagues. Her meticulous nature and proactivity has secured £000s of savings for customers which includes identifying savings of over £90,000 for one customer due to a billing error.

Well-deserved win

We’re all really proud of Becky’s achievement. John Palmer, Flexible Procurement Team Manager, commented, “this award is so well deserved. Becky is incredibly conscientious, with a strong focus on doing the best that she can for her customers. She provides training and support for her colleagues both within the team and in the wider business, making time to help colleagues despite her own heavy workload. I’m thrilled for Becky, she deserves this success.”

Incredible night

We spoke with Becky after her success who said, “Thanks to Energy Live News for hosting an incredible night! I still can’t believe I won the Secret Star award. It was amazing to be nominated, let alone win so I am overjoyed to have been picked by the judges! A special thanks to all my amazing clients, supply contacts and colleagues.”

Smart Procurement

EIC supports major energy users with Fixed, Flexible and Group procurement solutions. Working with EIC you will receive a dedicated support team to fully manage your utility supplier relationships and queries, change of tenancies and timely consumption data. Read more about our service here.

Celebrating a double nomination at the TELCAs

Tonight is the annual Energy Live Consultancy Awards (TELCAs), held at the Institute of Engineering and Technology. EIC are thrilled to be nominated for Consultancy of the Year and Secret Star award.

Consultancy of the Year

Being shortlisted for Consultancy of the Year is a real achievement and testament to the hard work of the EIC team. We continue to deliver market-leading Strategic Energy Solutions to our client base focusing on Intelligent Buildings, Smart Procurement and Trusted Compliance.

Our flexible procurement traders locked in savings for our clients of £1.6m in the first quarter of 2019 alone and we’re supporting our clients with delivery of ESOS phase 2 and the new Streamline Energy and Carbon Reporting SECR scheme. We’re also innovating and refining our IoT-enabled controls solution working with leading partners such as Intel. The day after the TELCAs we’re holding an Intelligent Buildings event with our partners Intel at their offices in Canary Wharf. If you would like more information on our Intelligent Buildings solution you can download our brochure here

Secret Star

Flexible Account Manager, Becky Knowles, is shortlisted for Secret Star due to her exceptional customer service and excellent industry knowledge. Becky is an integral part of the Flexible Account Team managing a wide range of larger clients. She regularly goes above and beyond expectations for clients and colleagues, proactively checking information that has secured £000s of savings for customers. This includes identifying savings of over £90,000 for one customer due to a billing error.

The client who supported Becky’s nomination commented, Becky provides key communication between myself, as the customer, and our supplier; who aren’t always the easiest to contact. That communication link has been critical, especially when changing suppliers or having issues, for example with invoices. She has gone above and beyond what I would expect a person in her role would do. She also provides me with a number of bespoke reports that have been very useful for my organisation. Any new reports she has gone through and explained the workings around them and is able to make any bespoke adjustments if needed.

We’re keeping our fingers crossed!

Our teams work really hard every day to ensure our clients get the right solutions for their businesses so it’s great to have been recognized for our efforts. We’re looking forward to the ceremony tonight, and would be delighted to win!  Follow our LinkedIn and Twitter pages to see the events as they unfold.

Best of luck to all our fellow nominees too!

Capacity Market T-1 auction clears at all-time low

Capacity Market T-1 auction clears at all-time low

The rescheduled 2018 T-1 Capacity Market (CM) auction cleared at an all-time low price of £0.77/kW, falling from the previous low seen at the last CM auction of £6.00/kW. A total of 129 CMUs (Capacity Market Units) were awarded agreements, procuring a total 3.6GW capacity.

Overall, gas-powered and combined heat and power (CHP) units received the majority of agreements, obtaining 45 and 30 respectively.

The low clearing price proved discouraging for demand-side response (DSR) units with a total of 29 DSR agreements awarded to providers, down from 74 DSR agreements in the 2017 T-1 auction. Storage projects were also deterred, with 6 total projects awarded agreements.

A full breakdown of the results and applicants is provided by National Grid ESO here.

Current State of the Capacity Market

The CM scheme is currently under suspension, following a ruling on 15 November 2018 by the European Court of Justice that its design was biased against small-scale, clean energy units and therefore shouldn’t be eligible for State Aid approval. Under EU State Aid rules, it is required that member states need to consider alternative options to meeting power demand, before subsidising fossil fuel generation.

The Court’s decision means that payments made under the CM scheme will be frozen until the UK Government can obtain permission from the European Commission to continue in an official capacity.

The European Commission has to undertake a formal investigation of the CM to clear it. If successful, the Department of Business, Energy and Industrial Strategy (BEIS) has said that auction results to date will still stand and that payments are legal.

In the meantime, BEIS has asked the National Grid Electricity System Operator (ESO) to keep the Capacity Market scheme running, short of making payments. BEIS has said that if those with contracts deliver their obligations, they may then be eligible for deferred payments if the market is reinstated.

BEIS expects a decision by the Commission to be made by early next year.

Stay informed with EIC insights

Our Market Intelligence team keep a close eye on the energy markets and industry updates. For the most timely updates you can find us on Twitter and LinkedIn Follow us today.

Visit our webpage to find out more about EIC Market Intelligence and how we keep our clients informed at a frequency to suit them.

An update on Smart Export Guarantee

The Department of Business, Energy and Industrial Strategy (BEIS) has published a response to their consultation on the future for small-scale low-carbon generation, which sought views on policy proposals for a Smart Export Guarantee (SEG).

The SEG will require suppliers with at least 150,000 domestic customers to provide a minimum of one tariff offer to small-scale low-carbon generators. Exporters of up to 5MW capacity of anaerobic digestion, hydro, micro-combined heat and power, onshore wind, and solar photovoltaics are eligible for payment.

It is the government’s opinion that small-scale low-carbon electricity generation should be supported by competitive, market-based solutions. To this effect, the government will not specify a minimum tariff rate in order to allow the market to develop. However, a supplier must provide payment greater than zero at all times of export.

The SEG is a replacement for the Feed-in Tariff (FiT), which closed to new generators in March 2019. The Feed-in Tariff scheme was originally introduced in April 2010 in order to incentivise the development of small-scale renewable generation from decentralised energy solutions. Generators were paid a fixed rate determined by the Government, which varied by technology and scale.

How will this impact you?

All suppliers that meet the SEG criteria will be required to offer at least one tariff by an expected date of 31 December 2019, providing small-scale generators with a choice of who they want to export to.

Currently, there are very few suppliers that offer tariffs of this nature. However, as the deadline approaches it can be expected that all larger suppliers will begin to offer their own options, allowing generators to choose the best tariff for themselves.

Stay informed with EIC insights

Our Market Intelligence team keep a close eye on the energy markets and industry updates. For the most timely updates you can find us on Twitter and LinkedIn Follow us today.

Visit our webpage to find out more about EIC Market Intelligence and how we keep our clients informed at a frequency to suit them.

An Insight into Gas Storage

Gas storage in the UK and on the Continent are both continuing to fill up fast and are much higher than normal levels for the time of year. With so little of the injection season having passed, for storage to be at these record high levels could pose problems later in the summer, when assets are even fuller and demand even lower.

UK

Medium Range Storage in the UK is 66% full, with considerably more gas in store for this time of year than at any point in the last six years.

The high inventories are partially boosted by Interconnector (IUK) maintenance happening in April as opposed to June. However this schedule change was to coincide with a time when the conduit was typically less active. With just 5TWh of working gas capacity left to fill, IUK exports will be key in using up any excess supply.

In September 2016, storage was at almost full capacity and the IUK was flowing at its maximum level. This pushed prompt prices as low as 20.6p/th. However, this situation is less likely now as the BBL pipeline, which currently only flows from the Netherlands, is undergoing maintenance to enable reverse flows (UK to the Continent). This will open up a route for a further 40 MCM/d of gas to flow away from the UK.

Europe

European storage reserves are 100 times bigger than the UK with a working gas capacity of 1087 TWh. This is currently 62% full. Having entered the injection season at the highest levels on record due to the additional LNG coming to Europe, injections have actually begun the season fairly strongly. Additions to gas storage are only marginally below last year’s levels when the injection season began with inventories at record low levels.

Injections across Europe through summer 2018 run at, on average, 3.3 TWh/d. However in June, July and August this moved to 4.0 TWh/d. If we run at that rate of injections this summer, then storage will be full by the middle of September.

However, as assets fill, due to increased pressure within the facility the rate of injection slows. At this rate, European assets will be 90% full by late August. Assuming the injection rate then halves, Europe will have to accommodate, or see a supply reduction, of 1TWh of gas per day throughout September, that would typically go into storage. This is over half of the UK’s total demand on a summer day.

This scenario is likely to tip the supply demand balance and could put very strong pressure on gas and power prices later this summer.

STAY INFORMED WITH EIC INSIGHTS

Our Market Intelligence team keep a close eye on the energy markets and industry updates. For the most timely updates you can find us on Twitter and LinkedIn Follow us today.

Visit our webpage to find out more about EIC Market Intelligence and how we keep our clients informed at a frequency to suit them.

Government to make further adjustments to Capacity Market

Following a consultation in March on additional measures to keep the Capacity Market (CM) running smoothly during the current standstill period, the government has published a decision detailing planned legislative changes.

The government maintains that the CM scheme is still the right mechanism to provide security to electricity supplies at the least cost. In order to continue this, the government intends to:

  • Replace the planned T-4 auction with a T-3 auction for delivery in 2022/23.
  • Allow certain renewable technologies to participate.
  • Remove the historical floor from the interconnector de-rating methodology.
  • Make minor corrections and additions to the CM Rules to ensure they are clear and operate as intended.

When implemented, these rules will see renewable technologies allowed to bid for contracts for the first time under the Capacity Market, having previously failed to qualify due to funding through subsidies. Renewable generators that do not receive support via the Contract for Difference, Renewables Obligation or Feed-in Tariff schemes will be allowed to participate.

The rearranged date for the delayed 2018 T-1 Capacity Market Auction is scheduled to go ahead on 11-12 June 2019 for delivery in the 2019/20 year.

The current state of the Capacity Market

The CM scheme is currently under suspension, following a ruling on 15 November 2018 by the European Court of Justice that its design was biased against small, clean energy and therefore shouldn’t be eligible for State Aid approval. Under EU State Aid rules, it is required that member states need to consider alternative options to meeting power demand, before subsidising fossil fuel generation.

The Court’s decision means that payments made under the CM scheme will be frozen until the UK Government can obtain permission from the European Commission to continue in an official capacity.

The European Commission has to undertake a formal investigation of the CM to clear it. If successful, the Department of Business, Energy and Industrial Strategy (BEIS) have said that auction results to date will still stand and that payments are legal.

In the meantime, BEIS has asked the National Grid Electricity System Operator (ESO) to keep the Capacity Market scheme running, short of making payments. BEIS has said that if those with contracts deliver their obligations, they may then be eligible for deferred payments if the market is reinstated.

BEIS expects a decision by the Commission to be made by early next year.

How the closure may affect you

In the short-term the Capacity Market charge will still be levied on customer’s bills, currently accounting for 0.3p/kWh, approximately 2.5% of a bill. This means that consumers will likely see little immediate change.

However, the ongoing suspension could mean a halt to the charge. An unsuccessful investigation by the European Commission could potentially see UK consumers receive a refund for previous CM charges paid through their electricity bills. This could be partially offset by a resultant hike in wholesale energy prices as guarantees of supply from larger operators are no longer certain.

Smaller operators in the scheme may be faced with a dilemma as missed capacity payments could result in cash flow issues. However, a closure to the Capacity Market could see the early shutdown of some coal plants, raising market power prices, and providing opportunity to these smaller operators.

Stay informed with EIC Insights

Our Market Intelligence team keep a close eye on the energy markets and industry updates. For the timeliest updates you can find us on Twitter and LinkedIn. Follow us today.

Visit our web page to find out more about EIC Market Intelligence and how we keep our clients informed at a frequency to suit them.