Five things we learnt from Energy Spectrum 668

With five of the Big Six having published their segmental accounts – breakdowns of financial performance and costs across generation and supply business areas – it is readily apparent that, in general, margins are on a downward trend. In this week’s Energy Perspective, we suggest that, while some suppliers were losing money supplying some fuels in 2016, but still – for the Big Six at least – able to post record domestic energy supply profits, the picture just two years later is much bleaker. Further, the somewhat frank language laid out in parent company reports doesn’t leave much room for optimism, with all citing the price cap and competition squeezing profits.

The UK’s latest and third Contracts for Difference allocation round (AR3) opened on 29 May and, with a limited budget for the round, competition between projects is likely to be fierce, especially from offshore wind providers. We look more closely at AR3 in this week’s Policy section.

On 24 May, Ofgem published its sector specific methodology decision for the RIIO-2 price controls starting in 2021. In this week’s Regulation section, we state that while there is a lot of new thinking around driving innovation, responses to vulnerability, and stimulating environmental measures, the immediate media focus has been on how far allowances will be reduced against current controls and the estimated £6bn saving. We will be looking into Ofgem’s position in more detail soon.

A UK Energy Research Council briefing paper on the flexibility of Britain’s gas networks offers an interesting perspective on a new area that will need to be considered given the looming issue of heat decarbonisation and the repurposing of the gas networks. We look more closely in this week’s Industry Structure section.

In this week’s Nutwood, our analyst Joe Camish discusses several notable unplanned outages on the NEMO Link interconnector during May. There are, he suggests, some important learnings for market participants.

Related thinking

Low carbon generation

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...

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...

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...

Regulation and policy

Calm before the storm? 2021 energy supplier compliance developments

The latest update to our Energy Supplier Compliance Portal went live on 4 May and includes changes to the compliance landscape during February to April 2021. While the previous quarter’s update reflected new principles resulting from Ofgem’s Supplier Licensing Review (SLR) and protections for prepayment meter customers facing self-disconnection, Q121...

Regulation and policy

Electricity transmission charging reform – overtaken by changing priorities?

Charging for the transmission network is never out of the development process for long. From major reviews, such as that initiated under Project Transmit in 2010, to significant reforms such as removing the triad benefit from distributed generation in 2018, and a host of smaller developments, change seems the only...

Energy storage and flexibility

How nuclear energy can help the UK reach its net zero goals

This article was originally written in Energy Spectrum on 21 March 2021. To find out more about a subscription to Energy Spectrum, please contact Nick on n.palmer@cornwall-insight.com. There are several challenges to reaching net zero, where its proponents believe nuclear could add value. Some of tomorrow’s main issues concern: How to provide low...

Commercial and market outlook

April showers bring DUoS for every half hour

Almost two years ago, Ofgem approved DCP268 DUoS Charging Using HH Settlement Data, which will move existing non-Half Hourly (NHH) settled demand customers onto time-based Half Hourly (HH) Distribution Use of System (DUoS) unit rate charges. With the modification to be implemented in the DCUSA on 1 April, we revisit...

Announcement

Introducing Energy Spectrum Europe

Cornwall Insight is pleased to announce the launch of Energy Spectrum Europe. This new addition to the Energy Spectrum stable will provide the authoritative, independent insight and analysis of energy markets for which its peers covering Great Britain, Ireland and Australia are rightly renowned. Every month Energy Spectrum Europe will...

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