This week’s Energy Spectrum overview | 14 May 2018

In this week’s Energy Perspective, we consider the current options for appealing industry code changes, following the Competition and Markets Authority (CMA) issuing its final determination on the allocation of costs in relation to the EDF Energy/SSE appeal on an electricity transmission charging rule change (CMP261), relating to alleged breach of the upper limit of generator transmission charges set by the European Commission.

We argue that the current system is skewed in favour of those able to afford to go through the process – the large incumbent players. Acknowledging that there inevitably costs to any appeals process, we consider what changes should be made to ensure a fast, effective and affordable system that is accessible to all market participants.

In this week’s Policy section, we examine calls from the CMA for heat networks to be regulated as it published initial findings from its heat networks market study.

The findings reveal that some customers pay more for their heat through heat networks than alternative fuel sources and that consumers don’t receive the same levels of protection as gas and electricity customers. The CMA has set out measures to address these issues, focusing on the creation of a statutory regime governing the regulation of heat networks.

We agree that the case for regulation is compelling and illustrates a continuing need for consumer protection in a world where more consumers are supplied off the public networks.

The section also covers the BEIS and Welsh Affairs joint committee hearing to scrutinise the Swansea Bay Tidal Lagoon project decision-making process, an evidence session on the UK’s progress in developing the market and infrastructure for electric vehicles and a European Commission memorandum detailing the impact on the Internal Energy Market if a ratified withdrawal agreement is not reached before Brexit.

In this week’s Regulation section, we gather together a diverse range of industry responses following the closure of Ofgem’s RIIO-2 framework consultation on the next round of price controls. The responses come from a range of stakeholders including Elexon, National Energy Action and Citizens Advice and highlight that, given the competing demands, there is a long way to go to strike the right balance and ensure the RIIO-2 framework is appropriate.

We also discuss Ofgem’s response to the recent BEIS consultations on the future of the Energy Company Obligation and the Warm Home Discount and argue that, with much to take on board, BEIS will have its work cut out to ensure that the plans are robust and industry has enough time to prepare before commencement of the next phases of the schemes.

In our Industry Structure section this week, we review E.ON’s Q1 2018 results, which show a strong start to the year. 

The company revealed a 41% increase in net earnings compared with the same period in 2017. The UK picture is less promising as E.ON expects annual earnings to be lower due to restructuring expenses and the intervention of the CMA. We argue that this reflects the considerable change and uncertainty for many suppliers in terms of regulatory policy.

The section also previews a forthcoming Cornwall Insight and Pixie Energy hosted event in Central London on 19 June focused around innovation at the grid’s edge. We believe this is an evolving and vital part of the electric power sector, which will have far-reaching implications for our future energy system.

In this week’s Nutwood section Cornwall Insight’s Head of Research, Ed Reed, reports on Lux Nova’s Local Energy Projects: From Concept to Reality (and Beyond) half-day seminar, which brought together almost 100 local energy specialists to share both experiences and frustrations. The session covered grid innovation developments, local balancing initiatives, corporate PPAs and examples of local energy innovation schemes from around the UK.

What is the Energy Spectrum service?

The Energy Spectrum service consists of two publications designed to keep you informed of key news from the energy market

  • Daily Bulletin –  a concise daily summary of the key news from the last 24 hours in policy, industry and markets, and regulation
  • Energy Spectrum – our longer weekly publication provides a more detailed look at the events of the previous seven days. Energy Spectrum discusses the headline news and highlights key information within each brief. It also includes a markets page outlining headline trends in gas, electricity, and commodities

Sign up to a free trial

To subscribe or to request a free four-week trial of the service, email enquiries@cornwall-insight.com or call 01603 604 400.

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...

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...

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...

Low carbon generation

Nuclear energy and its potential importance for net zero

This article was originally written as a longer piece 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. Nuclear energy has been an integral part of the UK’s electricity system for many decades. Currently, nuclear provides around...

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