In this week’s Energy Perspective, we examine the progress in setting the broader energy price cap. The challenge now, we argue, transfers to Ofgem and the industry in implementing it. Ofgem has been seeking views on different ways the various elements of the price cap might be calculated through a series of working papers and we discuss the thinking that has emerged so far and the challenges ahead.
In this week’s Policy section, we look into new estimates from financial think tank Carbon Tracker that predict a steep rise in EU Emissions Trading System (EU ETS) prices if the European Commission ultimately legislates to align the bloc’s current emissions targets with the goals of the Paris Agreement. We argue that after years of negligible effect on power station economics, the EU ETS price increase could finally provide the necessary price signal on a pan-European basis.
The section also examines the BEIS Public Attitude Tracker statistics, which reveal a new peak in the level of public support for renewables.
In this week’s Regulation section, we review the news that there will be no mid-period review from Ofgem on the RIIO-ED1 price control after it was found that if a full review was undertaken it could damage investor confidence. The move was criticised by Citizens Advice as a “missed opportunity” for the regulator to rectify handing companies “billions in unjustified profits”. However we argue that on balance Ofgem made the right decision to maintain regulatory confidence.
We also discuss Ofgem’s recently opened consultation on fully implementing the Competition and Markets Authority’s recommendation to fully remove the whole-of-market requirement from the Confidence Code and the outcomes of the Regulatory Policy Institute’s annual conference.
In our Industry Structure section this week, we discuss the implications of the sale of Flow Energy to Co-operative Energy after a majority of shareholders voted to accept a purchase offer.
The section also reviews new recommendations from the Energy Technologies Institute to reduce the costs of new nuclear power generation in the UK, which the Nuclear Industry Association says shows that new nuclear “need not be expensive”. We argue that while the report identifies areas throughout the new nuclear design and build process where project costs can be reduced, it is worth noting that four of the eight prioritised actions fall within the political and regulatory context category.
In this week’s Nutwood section Cornwall Insight Associate Peter Atherton looks at the future of Iberdrola after the company reported strong Q1 2018 results. He examines the Iberdrola’s performance and long-term strategy alongside the diminishing importance of the UK to company.
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