These papers are distilled dispatches from the energy frontline. None of the collations of notes and materials below is intended to indicate that legal materials needed to make an assessment are complete. No legal advice is offered in providing these materials.

They are, however, food for thought.

Opinions and Papers 2019

The Smart Meter Revolution - (September 2019)

 

ONCE UPON A TIME gas and electricity meters were owned by the old supply companies. They are now owned by (or in many cases, they are rented by) the new supply companies.

 

Whereas in the long, distant past meters were unimportant and uninteresting, government intervention has meant that they are now profitable (for the meter-leasing companies), problematic (for consumers and suppliers) and potentially expensive (for suppliers).

 

They are also now meant to be exciting new ways into ....

When is a Plant a Power Plant – (August 2019)

 

 

A RECENT CASE will likely come to be called the case of when a power plant is not a power plant.

 

X and Y were contractors for the construction of a waste-to-energy (WtE) power plant. They had fallen out (we aren’t given the details) and, as is usual good practice, they went to adjudication.

 

Their contract provided for adjudication under the Construction Act (CA) - but the CA specifically excludes from its scope power generation.

 

The adjudicator found in favour of X and ordered Y ....

The New and Future Agenda - (July 2019)

 

 

ONCE BREXIT IS SORTED (within the next twelve months?) the issue on the table for the government then in power will be climate change.

 

What has caused the issue to become this focal is partly the apparent evidence of climate change, partly protests against presumed inactivity to deal with climate change and partly because zero-carbon is now a target enshrined in law. And global politics, of course.

 

Achieving zero carbon, the detailed work of the Committee on Climate Change (CCC) shows, can be done, but only just and only if we now step up the pace significantly to deliver intermediate targets in the 2020s.

 

We know that the UK is behind the curve. We know that it cannot, without change, meet....

Incentivising Renewables  - (June 2019)

 

 

THE FUTURE FOR RENEWABLES is encouraging, robust, even rosy, is it not?  The government has accepted (and has almost completed the process of legislating for) the recommendation of the Committee on Climate Change (CCC) to adopt a binding 2050 zero-carbon target.

 

The target demands a huge increase in low-carbon power. To reach the intermediate targets (every five years from 2020), much is needed soon. Since solar and onshore wind are the cheapest form of low-carbon power it is obvious, is it not, that if we need more and we need to keep the cost down, we need much more onshore wind and solar power?

 

It is equally obvious that unless these technologies are at grid parity (cost the same as the alternatives), they need some form of financial support. But they haven’t reached grid parity, therefore...

Getting to Zero Carbon - (May 2019)

 

the Committee on Climate Change (CCC), has published its report on whether the UK should and, if so, how it should, aim at a zero carbon target for 2050.* It is profoundly ambitious.

 

Such a target is a big bullet for any government to bite (several have done so: the UK is by no means the first). We currently have an 80% target and interim targets of 51% by 2025 and 57% by 2030. We won’t meet them; we are off course and government is failing to face its policy deficits head on.** A zero target will be that much harder.

 

The new target needs policy of the kind and breadth we don’t have. Zero carbon means most sectors must get close to zero without offsetting. What is proposed is wide ranging. The main points are...

Operational Flexibility - (April 2019)

 

THE COST OF USING the electricity networks is high. For domestic consumers it’s about 26% of the bill; business costs vary by consumption but can be as much as 20% which, for any form of consumer, is a hefty chunk of a bill. It could get higher, very much higher.

 

Before renewables came on the scene, most electricity was delivered from large power stations via the transmission network, down into the distribution network to businesses and homes. It was a one-way traffic that the emergence of renewables overturned. Now distribution networks are...

Capacity Market Restart - (March 2019)

 

THE CAPACITY MARKET WAS SHUT last November when the European Court of Justice (ECJ) annulled the approval of the scheme by the European Commission, thus making its continued operation illegal. Almost immediately the UK announced the closure was entirely technical and implied the interruption would be short-lived—by describing the closure as a “standstill”, i.e., in suspension until a final decision was taken by the Commission.

 

At the end of January the Commission lodged papers to appeal the ECJ decision. That appeal is likely to take upto 18 months to be heard.

 

In February, the Commission opened a detailed investigation into the CM scheme saying it needed to do so because....

An Energy White Paper - (February 2019)

 

THE GOVERNMENT has announced a new Energy White Paper for this summer.

 

The Energy White Paper will (as all white papers do) set out the thinking behind government big-picture plans for the future. It will enunciate what government will plan to do, consultations it will undertake and its reasoning behind plans whose details are yet to be specified.

 

What it won’t deal with is what happens after a no-deal Brexit. We know what will happen in that eventuality; in case we didn’t, BEIS has outlined possible outcomes*. Any fallout needs solutions for immediate implementation, not at some point in the future.

 

There are three main transformative spurs to energy policy we should expect to impact ......

Unfair Charges - (January 2019)

 

GOVERNMENT IS CLEARLY far too preoccupied to pay heed to what is happening outside the Brexit conclave. But it will be forced to do so if the network-charging proposals from Ofgem are to be implemented.

 

Ofgem has over the last four or so years been picking away at the questions of how to get more generators onto overcrowded networks, how to cut the costs of doing so, who should pay for the networks and how they should be run.

 

This is all part of the government’s flexibility programme which foresees a future (a pretty near future) in which domestic consumers, as well as everyone else, can buy electricity by the half hour or can sell capacity (by not consuming), in which more generation can enter the system, intermittency can be dealt with and storage can play a big role.

 

As Ofgem has reached its conclusions along the way over this time, industry arrangements have been changed. Sometimes the results have been......

Opinions and Papers 2018

The Future Capacity Market - (November 2018)

 

THE CAPACITY MARKET IS SHUTor, as National Grid prefers to say, it’s in a “standstill period”. It has been, Greg Clarke assures us, temporarily stood still by the European Court of Justice (ECJ) for technical reasons.

 

Well he’s right; but there isn’t any comfort in that because the technical reasons are complex and before the Capacity Market is back on track a great deal has to be done, both by the European Commission and by the UK government.

 

The UK government has been unable to get its act together to make a minor amendment to the Electricity Act 1989 to incentivise storage. This is something it says it wants and to which......

Renewables Renaissance? - (October 2018)

 

Looking to the future (as they are required to do) both the National Infrastructure Commission (NIC) and the Committee on Climate Change (CCC) earlier this year made a number of recommendations to government (see Update July 2018).

 

These recommendations can be summarised as follows:

 

there needs to be a substantive increase in generation from renewables, starting soon; that should be achieved primarily by extending the Contract for Difference (CfD) subsidy auction scheme to all renewables technologies on an equal basis.

 

The effect of the recommendation could be to kick-start development of the....

Changes to Heat Networks - (August 2018)

 

HEAT NETWORKS ARE UNREGULATED local monopolies. They currently pose a number of problems.

 

¨ If the network is faulty or if its operator is poor, customers may suffer periods of no hot water and no heat, with no plausible (sometimes no permitted) alternative supplies.

¨ If the heat fails, there is no statutory obligation to provide recompense.

¨ Customers on some heat networks cannot complain to an enforcement body and have (potentially) higher charges to pay than others.

¨ Network operators may make no provision for vulnerable customers or for those who can’t pay.

¨ Unit charges vary between networks, as a result of variations in efficiency and dependability, of operator efficiency and, of course, on the profits to be made by the heat network supplier.

 

These have been problems for some time and both Ofgem and the BEIS Select Committee have....

The Changing Energy Market - (July 2018)

 

THERE IS A REVOLUTION in energy taking place, but on the ground, it seems to be barely visible.

 

Small Feed-In Tariff (FiT) projects to one side, growth in renewable generation is slowing with the ending of the Renewables Obligation (RO).

 

Also slowing are new battery schemes, currently mainly built as Capacity Market providers because prices are low and demand is uncertain.

 

Whenever renewables show signs of flagging, developers and their service industries wonder whether if they are watching the end of an era or just an interregnum. It is the short term that is the key uncertainty, not the longer term. 

Renewable Heat Incentive - (June 2018)

 

LAST MONTH THE SELECT COMMITTEE published its report on the Renewable Heat Incentive* (RHI) and utterly trashed BEIS’s development and management of the scheme in doing so.

 

¨ Forecasts of RHI take-up were “wildly optimistic” with 513,000 new schemes predicted, now revised down to 111,000. So government investment has fallen (from £47 to £23bn) and the RHI’s contribution to heat and emissions obligations has fallen by 65% and 44% respectively.

 

¨ Low take-up was caused by inbuilt barriers, including up-front payments for “costs [that] are prohibitive”. BEIS will introduce “assignment of rights” to make the domestic scheme work, with absolutely no evidence it will do so.....

Network Constraints - (May 2018)

 

THE DISTRIBUTION NETWORKS are full. Or, more exactly, in many areas there is not – and for a considerable time there has not been – any available ‘simple’ capacity, i.e., capacity which enables a small generation plant to connect to the network and run at all times (save for grid faults).

 

The problem has become more acute over time with the growth of embedded, mainly renewable, generation. It has been managed by the distribution network operators (DNOs) offering a raft of new forms of connection (non-firm, timed or volume-limited) and by costly system reinforcement.

 

An OFGEM consultation on connections two years ago* attracted responses from developers and associations which, generally, told the same story:

Changes To Connections - (March 2018)

 

ON 6 APRIL NEXT a new regulation* comes into effect that will transform the way developers approach project review on any given site.


From that date onward, any developer applying to a distribu-tion network operator (a DNO) for a grid connection will have to pay for it.


The fact that the DNO will first have to notify the applicant how much it will charge and the breakdown of that charge may temper—but only in a minor way—the effect of the change.

 

What, exactly, is to be paid for.....

 

Heat Networks - (February 2018)

HEAT NETWORKS ARE district-heating schemes, built mainly for new-build housing estates or blocks of flats. They heat water in a central generator and supply it via an underground pipe system to individual properties in the form of heat and hot water.

There are different ways of running such schemes, but they tend toward one model. The developer of the properties contracts with a heat network operator (HNO) who will build the generation unit and the underground network and who will be responsible for supplying and dealing with customers.

Under this model, the HNO either owns the generation unit and the network or (less often) it leases them at full cost. Most importantly, it derives its entire revenue from the supply contracts it has with its domestic heat customers.  These contracts are the only means for the HNO to recoup its investment.

The New Markets - (January 2018)

ALTHOUGH ENERGY STORAGE is to be classed as generation (when the 1989 Electricity Act is amended), the outputs for generation and storage tend to aim at different markets, at least for now.

 

The output of traditional generation goes to supply companies. Small-scale generators originally had the same output market, but now tend to focus ‘behind-the-meter’. Both are also able to enter Capacity Market auctions and to sell into the Balancing Services Market, but for the main part these markets have been marginal for such generation.

 

By contrast, storage output is substantially aimed at these markets, despite early development in linking storage and intermittent generation schemes and in adding on storage to existing small-scale generation. 

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