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

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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