Five things we learnt from Energy Spectrum | 656

With an Ofgem review of the microbusiness sector in the offing, the increasingly competitive nature of the business energy market – which is also being radically overhauled by innovation – means that the regulator would be wise to take a wider, overall market view in its review process. This is the conclusion of this week’s Energy Perspective, which analyses in further detail how innovation and competition are decoupling the business electricity and gas markets, finding that regulation will need a much clearer framework as the markets become ever more diverse.

Following its suspension, the success of the Capacity Market (CM) scheme now depends on a swift resolution to the ongoing state aid challenge. In this week’s Policy section, we discuss BEIS’s publishing of its response to an earlier consultation on amendments to the CM which, among other points, outlines draft regulations that will enable a replacement T-1 auction for 2019-20 delivery.

The Data Communications Company’s costs are increasing year-on-year, and substantially above its forecasts – most recently seeing it failing to justify £132.48mn of internal costs it forecast to be incurred over 2018-26. In this week’s Regulation section, we find that Ofgem has seen little effort to budget for efficiency costs as, on 27 February, it announced that the business had failed to factor into its future costs any efficiency improvements or headcount reduction plans.

BP’s recent Energy Outlook 2019 is analysed in our Industry Structure section, where we suggest that the forecast emphasises that there is more to decarbonisation the power sector. Specifically, that a growing and wealthier population will demand more energy and while lower energy intensity will trim that growth, it will not be to the extent that global emissions reductions will be feasible without intervention.

Centrica’s publishing of its preliminary results for 2018 on Thursday 21 February is the subject of this week’s Nutwood, written by Cornwall Insight Associate Peter Atherton. With the results demonstrating that every major business unit fell short, Atherton suggests there are three possible futures open to Centrica.