Energy and Utilities

The Energy Transition | Balancing mechanism sees influx of smaller providers, C-Capture raises £8m to accelerate carbon capture, British Gas set to have the largest EV fleet in the UK

Published on 26th Feb 2021

This week we look at a roadmap being released for green hydrogen deployment by 2050, an analysis of how transmission charges are inflating renewable costs, how the balancing mechanism has seen an increase in smaller providers, and more.


Carbon capture start-up raises £8m to accelerate technology development

C-Capture, a carbon capture start-up, has successfully secured £8 million in its latest funding round from existing shareholders IP Group, Drax and bp Ventures. The British Business Bank's Future Fund also contributed to the investment by granting supplementary funding. CEO of C-Capture, Tom White, revealed that the investment will be channelled into "optimising its carbon capture technology [and] improving performance whilst driving down costs".

C-Capture was founded in 2009, and has worked with chemists and engineers to develop a "first-generation technology" which "has many unique properties and has the potential to be transformational for the carbon capture industry as a whole". C-Capture was awarded Breakthrough of the Year at the BusinessGreen Technology Awards in 2019 and in the same year secured a multimillion-pound investment from the UK Department of Business, Energy and Industrial Strategy (BEIS). The company has recently trialled the technology at a pilot scale plant and hopes the secured investment will help C-Capture become "one of the most impactful startups in the world’s future energy system".

Hydrogen Association releases roadmap to reach 80GW of UK capacity by 2050

The UK Hydrogen and Fuel Cell Association (UKHFCA) has released a timeline for green hydrogen deployment by 2050. Its report, The Case for Green Hydrogen, highlights critical factors that the government should address if it wishes to remain a world leader in hydrogen energy.

The report states that the UK could achieve 10GW of green hydrogen by 2030. To reach this target, the UKHFCA says support for the sector will be needed in the form of capital grants, tariffs and hydrogen fuelling infrastructure along major transportation routes. It suggests even a CfD-style model for hydrogen projects may be necessary. By 2050, the report predicts that 80GW of green hydrogen could be achieved. This would require the portion of hydrogen in the UK gas grid to be 100%, with green hydrogen being traded as a commodity and London acting as a trading hub.

The report estimates that if the hydrogen industry is properly supported, it could generate up to £320 billion for the UK economy as well as 74,000 jobs by 2050.

The UKHFCA is presenting the findings from its report in an event taking place on Wednesday 3 March.

British Gas set to have the largest EV fleet in the UK

British Gas revealed this week that it has ordered a further 2,000 electric vans (all-electric Vauxhall Vivaro-e vans), on top of a previous order of 1,000 electric vans made last summer. This new order means that British Gas will have the largest electric vehicle (EV) fleet in the UK when the vans hit the road next year. The electric vans will be rolled out in areas of high pollution as a priority.

Currently 35% of British Gas vehicles are running on electricity. However, in the wake of the most recent Vauxhall order, the company has moved the date for a fully electric fleet from 2030 to 2025.

‘Volatility and unpredictability’ of transmission charges inflating renewable costs

Scottish & Southern Electricity Networks (SSEN) Transmission has recently published a report titled 'Transmission Charges', which reveals that volatility and unpredictability in future Transmission Network Use of System (TNUoS) charges is expected to filter down as increased costs to end consumers. SSEN Transmission's analysis supports recent concerns raised by Scottish developers that TNUoS charges in Northern Scotland are noticeably higher than in the rest of the UK, as well as being volatile and unpredictable. TNUoS charges are paid by users of the transmission system and are based on bespoke regional TNUoS tariffs (of which there are 14) plus the users' declared capacity, known as transmission entry capacity.

Andrew Urquhart, Head of Whole System at SSEN Transmission, has said that "when you’re a developer and you’re trying to make your case and get your business funding you’ve got to put in that risk margin", which ultimately means that higher costs are passed on to consumers. In order to accommodate this volatility, some developers are having to factor in risk premiums of up to £10/MWh. In the report, SSEN revealed that it has not been able to attribute any consumer benefit to volatile charges which could justify the risks posed to generators.

Balancing mechanism sees influx of smaller providers

The balancing mechanism experienced a large increase in smaller providers during 2020, analysis from energy market experts Cornwall Insight has shown.

The greatest new entrant growth came from aggregated units, which more than doubled in number from 20 in January 2020 to 45 in January 2021. Gas reciprocating engines saw a similar annual increase from nine active units to 19.

The analysis highlighted the creation of Virtual Lead Parties (VLPs) in attracting new participants. VLPs can trade volumes without being a licensed electricity supplier or licensed generator and six participants have now registered as VLPs, including Flexitricity and Habitat Energy. Launch of the wider access application programming interface in September 2020 has further encouraged new entrants, by opening up the market for participants to join through a web-based route.

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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