Energy and Utilities Update | February 2020
Published on 17th Feb 2020
Welcome to our latest update on regulatory and market developments in the energy and utilities sector.
In a month of high winds across the UK and Europe, our latest edition of the Energy and Utilities update reports on the benefits of Storm Ciara for power generation, as well as research that estimates £50 billion is needed to meet UK offshore wind targets. We also take a look at the Department of Business, Energy and Industrial Strategy's consultation paper on heat networks, developments in the energy-from-waste sector, billing for electric vehicle drivers, and the latest capacity auction round.
If you would like to discuss any of the developments in this update, please contact one of the experts listed below.
BEIS to increase investment and regulation for heat networks
The Department of Business, Energy and Industrial Strategy (BEIS) issued a consultation paper on 6 February 2020 setting out its intention to increase investment in heat networks and deliver legislative changes to enhance customer protection.
BEIS has also announced the first seven beneficiaries of the £320 million Heat Network Investment Project which was established in the UK in 2018 to support construction of heat networks across the UK. In total, £40 million of funding will be given to seven projects: Barking Town Centre Strategic Distribution Energy Scheme; Bristol City Council Old Market Heat Network; Bristol Redcliffe Heat Network; Leeds City Council; Energetik's Meridian Water Heat Network; Veolia's South East London Combined Heat and Power Network; and Peel Energy's Liverpool Waters Heating Network.
BEIS also outlined its intention to design a heat network regulatory model to give heat network consumers a comparable level of protection to gas and electricity utilities in the regulated energy sector.
Aurora research shows £50bn required to reach offshore wind targets
Aurora Energy Research has published a report stating that around £50 billion of investment will be required to meet the UK government's offshore wind target of 40GW by 2030.
To reach this goal, three times the amount of capacity will need to be commissioned between 2020-2030 than was commissioned in the previous decade. It is estimated that increasing the installed capacity to 40GW will cost a further £2.6 billion a year in Contract for Difference top up payments, which is more than five times the allocated budget for this period.
The report also warns that increased levels of subsidised offshore wind may put unsubsidised onshore wind and solar photovoltaic projects at risk.
Read more here.
Storm Ciara breaks wind generation record
The strong winds brought to the UK by Storm Ciara caused a surge in wind power generation over the weekend of 8 and 9 February 2020. This increase broke two wind power generation records, with a new record being set for instantaneous generation and additionally one for the amount of power produced in one day.
Throughout the day of Saturday 8 February, 44.26% of power produced was wind power, breaking the previous record from 9 December 2019. At just before 2am on Saturday 8 February, Drax Electric Insights estimated that wind turbines generated nearly 15GW of power, approximately 56% of the country's electricity.
Read more here.
Financial close achieved on 42MW energy-from-waste plant
Joint venture capital partners Covanta Holding Corporation, a world leader in providing sustainable waste and energy solutions, and Macquarie's Green Investment Group (GIG), a specialist in green infrastructure principal investment, announced on 11 February 2020 that the Newhurst Energy-from-Waste Facility in Leicestershire has reached financial close.
The facility will process up to 350,000 tonnes of non-recyclable waste and will generate up to 42MW of electricity, enough to power 80,000 homes.
Covanta and GIG will together own 50% of the facility, with Biffa, the primary waste supplier, owning the remaining half. Covanta will operate the facility under a long-term operations and maintenance agreement.
Read more here.
Moixa launches partnership for AI-powered EV charging
Smart technology company Moixa has entered into a partnership with Alfen, a Dutch energy solutions firm, to trial its artificial intelligence-powered software designed to reduce the energy bills of electric vehicle (EV) drivers whilst also delivering flexibility to the UK electricity grid.
Moixa's software, called GridShare, will be integrated with Alfen's EV chargers to create personalised smart charging plans based on household energy consumption patterns, locally produced solar energy and optimisation for time-of-use tariffs.
Alfen's EV chargers will also be tested for their ability to participate in grid services by increasing and decreasing charging speeds.
Read more here.
Capacity auction buys more than triple target volume
The year ahead (T-1) capacity auction for delivery in winter 2020/21 has cleared at a price of £1/kW. This is the second lowest price in the history of the capacity auction, sitting just above the T-1 auction for the current winter, which cleared at £0.77/kW.
The auction was heavily oversubscribed, with more than 3GW of de-rated capacity bidding against a 300MW target. In total, 1,024MW was contracted – more than three times the target.
Read more here (£).
