BEIS to take a hard line on Contracts for Difference supply chains starting this December
The Department for Business, Energy & Industrial Strategy (BEIS) has confirmed in a post-consultation response that it will terminate Contracts for Difference (CfDs) if generators fail to honour supply chain commitments. The new rules will apply in the next CfD auction, scheduled for December 2021 (more on this below).
The UK government wants to see more local suppliers benefitting from the bidding process. To that end, the process will require organisations developing projects in excess of 300 MW to provide BEIS with detailed plans of how projects will be built, which supply chains will benefit and when key milestones are to be met.
In the response document, BEIS has confirmed that it will extend the milestone delivery date (MDD) for projects from 12 to 18 months. The MDD is the deadline by which companies holding CfDs must demonstrate delivery progress to the government by providing evidence of spend. The government's analysis of whether developers are honouring their supply chain commitments will be moved forward to a period shortly following the MDD. Though BEIS is providing developers with a reduced investment risk by extending the MDD deadline, a penalty will arise via the government's Operational Condition Precedent, which allows for the termination of CfDs held by developers which fail to provide a Supply Chain Implementation Statement certificate before the Longstop Date.
Fourth CfD allocation round to open in December
Alongside the consultation response document referred to in the item above, BEIS announced that the fourth CfD allocation round will open to applications in December 2021. By confirming that the round will not take place until December, BEIS stated that it hopes to "provide further clarity to prospective participants". An indicative timeline for the round, including the specific opening date, is still yet to be announced.
The round will aim to double the capacity of renewable energy when compared to the previous round, and will be open to a broader range of renewable technologies. For the first time, the allocation round will include an auction for more established "pot 1" technologies, such as onshore wind and solar, and there will also be a "pot 3" auction for offshore wind. Less established technologies such as tidal and floating offshore wind will be able to compete in the "pot 2" auction.
National Grid unlocks 1.5GW of network capacity with rollout of Smart Wires technology
Network blockages reducing renewable generation could be alleviated with National Grid's rollout of new technologies capable of unlocking up to 1.5GW of network capacity. As more renewable generation comes online, power flows fluctuate and circuits can become unevenly loaded as a result of changing weather conditions, with some circuits remaining below their limits and others reaching maximum capacity. To solve this issue, US-based Smart Wires' SmartValve modular power flow control technology is to be installed by National Grid Electricity Transmission (NGET) at three substations in northern England. National Grid is set to increase the capability at two of these sites in the autumn, which could mean unlocking a further 500MW.
This SmartValve technology can immediately route power through circuits with spare capacity, maximising the use of the network. This technology will allow for larger quantities of renewables to be efficiently transferred to customers and will assist the decarbonisation of the UK's energy system.
David Wright, chief engineer at the National Grid, commented as follows: "I’m proud to see NGET leading the way and pioneering transformational and innovative engineering to achieve wide-scale decarbonisation and overcome bottlenecks that are preventing maximum use of our networks".
Day-ahead STOR increases prices as operators move to optimise markets
According to data from EnAppSys, the re-launch of STOR (short-term operating reserve) by National Grid ESO (NG ESO) as a day-ahead service has increased electricity prices. Instead of tendering for season-long durations (as was the case previously), STOR has been re-introduced on a rolling daily basis from 1 April, permitting asset owners to optimise between other market segments and STOR. STOR has a target requirement of 1,310MW holding capacity per day, with the capacity procured in a daily auction held before the day-ahead Nordpool and EPEX equivalents.
There was a high initial volume offered into the STOR market, with a 2,918MW bid in on 1 April This decreased to 1,220MW by 15 April, which was below NG's ESO’s capacity goal. At the end of April, this settled at roughly 2,000MW. Accepted volumes stayed between 1,127MW and 1,313MW during its first month, except on 8 April when an error prevented any tenders from being accepted.
In its first month, STOR's holding prices averaged at £3.00/MW/h, and ranged from £0.50-£6.50/MW/h. EnAppSys indicated that this was higher than the same period in 2019 and 2020.
The Queen's Speech signposts the introduction of the Environment Bill
In her speech this week, the Queen set out the government's intention to introduce the Environment Bill in the upcoming parliamentary year.
The Bill, which was initially introduced in January 2020 but has been delayed three times due to the Covid-19 pandemic, aims to redraw the UK's environmental rules following its departure from the EU. This will include setting new standards on issues such as air pollution, water quality, resource use and biodiversity, which were previously regulated by EU directives. The Bill will also seek to create a new regulatory body called the Office for Environmental Protection, which will ensure that these new environmental standards are being met.
The Queen said that "[t]he United Kingdom is committed to achieving net-zero greenhouse emissions by 2050 and will continue to lead the way internationally by hosting the COP26 Summit in Glasgow. Legislation will set binding environmental targets in the Environment Bill."
One of the UK's biggest electric vehicle charging hubs to be built in London
Hammerson and Aberdeen Standard Investments, a property development company, plans to develop a 236-bay electric vehicle (EV) charging hub at Brent Cross Shopping Centre in north London. In addition to servicing Brent Cross shoppers, the hub will also be accessible to drivers using London's North circular motorway, which sees 80 million vehicles pass over it each year.
The owners of Brent Cross intend install the chargers across the site in phases over the next five years. The first phase will see 50 22kW fast charging points installed in the shopping centre's multi storey car park, supported by a pair of 350kW ultra-rapid charging points.
EV charger provider, EVBox, will build the new London hub and it will be run and maintained by Franklin Energy. Once the chargers are operational, they will become a part of Franklin Energy's LiFe Network.
Electricity North West joins Flexible Power platform
Electricity North West (ENW) has announced that it has become the latest distribution network operator (DNO) to join Flexible Power.
Flexible Power launched in 2020 using funding from the Network Innovation Alliance, with the aim of enabling a more streamlined engagement process between flexibility providers and DNOs. In order to do this, the Flexible Power website signposts each DNO's flexibility locations, requirement data, procurement notes and documentation. Access to the Flexible Power Portal is granted once a provider is contracted, with the portal allowing them to declare their flexibility assets' availability, receive dispatch signals and view performance and settlement reports. The DNOs currently signed up to the platform are Western Power Distribution, SP Energy Networks, Scottish and Southern Electricity Networks, Northern Powergrid, and now ENW.
Steve Cox, ENW's engineering and technical director, said "[w]e are looking forward to joining this collaboration, which we believe will be instrumental in supporting the development of these new markets and further reduce barriers to participation".