Five things we learnt from Energy Spectrum | 665

Energy UK’s Future of Energy report, published on 24 April, lays solid foundations for a industry view on the pace, cost and direction of decarbonisation across the UK economy that fits well with the recent advice on moving to a net zero emissions target. In this week’s Energy Perspective, we give out thoughts on the agenda that it sets out finding much to commend. While broad in its scope, there are areas that we would quibble with such as more emphasis on fairness and equity issues in the retail market. We also suggest that extending its analysis into how to prioritise, resource and fund the main options would be a very useful next step for Energy UK and its members.

A 2 May consultation from BEIS on the future of the UK government’s and Devolved Administrations’ approach to carbon pricing once the UK leaves the EU sets out sensible recommendations on future options. However, as we find in our Policy section, it remains committed to its preferred option of aligning any scheme with the EU Emissions Trading (ETS) Scheme. We consider that, as the UK has been a major buyer of EU ETS permits, fungibility with a larger market should help with liquidity and stability.

Ofgem’s much-anticipated review of the microbusiness supply market comes at a time when the sector is seeing rapidly increasing competition. We look more closely at the review in our Regulation section, finding that the regulator will need a robust market segmentation that properly factors in the different types of supplier, consumer and intermediary on which to construct its assessment.

In our Industry Structure section, we analyse the latest electricity switching figures, published by Energy UK on 18 April, which show that March switching increased by 29% compared the same month in 2018 (according to Energy UK). Our own analysis highlights that since September 2018 when Ofgem launched its consultation on the default tariff cap, the electricity switching has increased as the gap between the average large supplier cheapest fixed tariff and the average large supplier SVT has increased. As the differential significantly increased from the end of January 2019, so too has the total number of electricity switches. We expect switching levels to fall with a decrease of the cap level expected in winter to reflect the falling wholesale price over recent months.

We have two Nutwood articles this week, both written in house and both covering a 2 May conference held by the Regulatory and Policy Institute. In the first, Cornwall Insight Analyst Jacob Briggs outlines how speakers and attendees addressed questions of establishing legitimate spaces for regulators to act, the role of regulators, and how to identify and deliver positive outcomes within and across generations. In the second, Cornwall Insight founder Nigel Cornwall synthesises his presentation at the event around how the regulatory framework in energy had already been adapted over several years to cover social and environmental guidance (SEG), but remains incomplete and in need of modernisation.

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Net zero corporates and ESG

Data critical for sustainable investments

On 24 June, attendees to our 'Financing net zero forum' tuned in to hear the expert panel discussions on the role of data in sustainable investment. Joining the meeting chairs, Cornwall Insight's Daniel Atzori and Emma Bill were our guest panellists from Mercatus and Victory Hill Capital Group LLP. For investors to make...

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Our Renewables Pipeline Tracker: In with the new – scoping projects and progression through planning stages

Our latest Renewables Pipeline Tracker was published on 11 June, and this blog provides a summary of some of the recent developments in our coverage of the pipeline for new build and repowering renewables assets in GB. What’s new? Seabed leasing rounds, scoping projects and CfD announcements Since our previous...

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Reallocating electricity policy costs to incentivise low carbon heating technologies

Funding the cost of decarbonising the power system has mainly been through the consumers' electricity bills. In fact, in 2020-21 these costs amounted to a whopping £10bn. But is this method of raising revenue for decarbonisation still fit for purpose when faced with the need to decarbonise the nation's heat?...

Regulation and policy

How will consumers take to Market-wide Half Hourly Settlement?

Ofgem published its decision to implement the move to Market-wide Half Hourly Settlement (MHHS) on 20 April. This confirms plans to move to new settlement arrangements over a four and a half year time period, with the Elexon-led Design Working Group’s Target Operating Model to be used as the blueprint. Meters...

Net zero corporates and ESG

Financing net zero panel advises policymakers for a long-term view of net zero to boost merchant renewable confidence

Last Thursday's 'Financing net zero forum' brought together 580 registered attendees across the renewables sector to listen to the expert panel discuss managing renewable merchant risk. Joining the chair of the meeting were experts from across the industry, with Shoosmiths sponsoring the afternoon discussions. Merchant renewables – the development of...

Regulation and policy

Ofgem raises modifications ahead of RCC and new switching arrangements

The latest edition of our Faster Switching Service Report due to be issued this week includes the latest developments in Ofgem’s Switching Programme and the associated Retail Energy Code (REC). Launched in November 2019, the Retail Code Consolidation (RCC) Significant Code Review (SCR) set out Ofgem’s intention to amalgamate the...

Net zero corporates and ESG

Get ready for climate risk reporting?

On 30 April we released the latest copy of our Energy net zero. The publication takes an in-depth look at the UK's transition to a low carbon economy. The below is an extract from our Energy Perspective on Task Force on Climate-related Financial Disclosure (TCFD). The article was originally published in the...

Commercial and market outlook

Data centres predicted to become prosumers of electricity

In combination with Cornwall Insight and Bit Power, Host in Ireland published its Biannual report of Ireland’s Data Hosting Industry. The report highlights the importance of sustainability in Ireland’s digital transformation. The report confirmed the number of operational data centres in Ireland increased by 25 per cent over the past...

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