Five things we learnt from this week’s Energy Spectrum | Issue 649

There is scant evidence that dividend payments are crowding out long-term investment in either the regulated or competitive utilities market, while regulators have been lax in policing capital structures of the regulated network companies. In our Energy Perspective piece this week Cornwall Insight Associate Peter Atherton rebuts the argument that high dividend payments have come at the cost of lower investment. Suggestions for reform include the potential to start with a dividend target and set the Return on Equity/ capital structure accordingly in order to offer shareholders a fair return.

The proposals for a Smart Export Guarantee are a welcome shift in policy, but uncertainties remain over metering and communications that mean there is a case for a transitional step after the closure of the Feed-in Tariff. In this week’s Policy section we explore the BEIS plans to create a market for small-scale renewables exports, placing a new obligation on large suppliers to provide a purchase tariff.

The appointment of OVO Energy as Supplier of Last Resort (SOLR) for Economy Energy’s customers firmly establishes the latter as the largest challenger brand in the domestic retail market. In the Regulation section we chart the history of compliance action against Economy Energy, and note the unique aspects of this most recent SOLR, including the waiving of rights to claim costs from the industry levy.

Solar would secure only incremental value from participation in the Capacity Market, while higher rewards can be captured for wind, National Grid’s proposed de-rating factors has revealed. In Industry Structure, we argue that the incremental approach to assessing the value of capacity fails to recognise the full contribution made by wind, especially projects that come to market either after or outside subsidy schemes.

The initial impacts of P305 cash-out reform has, two months in, seen cash-out price volatility increase and greater occurrences of price peaks and troughs. Cornwall Insight Wholesale Analyst Lee Drummee concludes that with this one of the main aims of the changes, it could be said that they have so far had the desired effect. However, whether the trends observed are purely down to the P305 changes is a moot point.

Related thinking

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...

Low carbon generation

Why energy system governance is not fit for purpose

In my recent blog, the Emperor’s new clothes I referenced a poll of our Financing Net Zero (FNZ) membership which revealed 75% support for an energy systems architect to ensure we manage the net zero transition. In the spirit of independent thinking that Cornwall Insight is known for, I respectfully disagreed and...

Announcement

The top 5 podcasts of 2020

We released 13 podcasts in 2020 covering all aspects of the energy market, from the Capacity Market and Electric Vehicles to Faster Switching and heat networks. Here are our top five podcasts of the year, ranked by the number of people who listened. 5. The Impact of COVID-19 on System...

Low carbon generation

Ireland to fall short of existing climate targets under BaU approach

Published on 13 September, a report by the Irish Wind Energy Association (IWEA) has called for a new policy system to enable the rapid deployment of renewable electricity. The third in a series of four studies which make up the 70by30 Implementation Plan, Building Onshore Wind identifies policy changes required for Ireland to deliver the...

Power and gas networks

Understanding the backdrop of the UK hydrogen economy

We are delighted to publish our research note on the hydrogen sector: 'Understanding the backdrop of the UK hydrogen economy'. Serving as a primer for our upcoming series of hydrogen insight papers, we chart the UK’s progress in developing a hydrogen industry. In our paper, we cover essential developments in...

Regulation and policy

Back to the Future: long term vulnerability outcomes

100 days have passed since the UK was placed into lockdown and, as the government looks to continue easing of restrictions, it’s worth reflecting on where we’ve been and start looking ahead to where we’re going. Thanks to papers from Citizens Advice and National Energy Action (NEA) we now have...

Home supply and services

COVID-19-driven changes to electricity Third Party Charges

The impact of COVID-19 on the energy sector has been a hot topic for the last few months. As we progress further into the UK’s lockdown period we are now beginning to piece together the wider picture of effects across energy Third Party Charges (TPCs). These impacts are expected to...

Low carbon generation

Flexible Asset PPAs – more capacity, more competition

The Power Purchase Agreement (PPA) market for flexible assets in the last six months has both grown in size and seen increased levels of competition as new offtakers and optimisers make themselves known in the market. What do we mean by the PPA market for flexible assets? We mean the...

This site is registered on wpml.org as a development site.