The Energy Transition | Cabinet Office announces net zero commitment in procurement procedure, Ecotricity sells its Electric Highway to GRIDSERVE and Renewable Energy Guarantee of Origin prices revert to pre-pandemic levels.

Written on 11 Jun 2021

This week we focus on the government's announcement that businesses must commit to net zero to win major government contracts, Ecotricity's sale of its Electric Highway to GRIDSERVE, and Renewable Energy Guarantee of Origin (REGO) prices are 50% higher than January 2021 as prices revert to pre-pandemic levels and more.

Cabinet Office announces that firms must commit to net zero to land major government contracts

According to new measures introduced this week, businesses must commit to net zero by 2050 and publish credible decarbonisation plans if they wish to bid for large government contracts. A decarbonisation plan explains where a company's emissions come from and any environmental measures that the business has in place. Certain large organisations already self-report their carbon emissions, known as Scope 1 (direct) and Scope 2 (indirect owned) emissions. The new rules require disclosure of selected Scope 3 emissions, including employee commuting, transportation, business travel, distribution and waste.

Minister for Efficiency and Transformation, Lord Agnew, explained that “…requiring companies to report and commit to reducing their carbon emissions before bidding for public work is a key part of our world leading approach. These measures will help green our economy, while not overly burdening businesses, particularly SMEs”.

Pursuant to the new measures, would-be government suppliers bidding for contracts above £5 million a year must commit to the government's net zero by 2050 target and will have published a carbon reduction plan by September 2021. Firms which fail to comply will be barred from bidding processes.

Ecotricity sells its Electric Highway to GRIDSERVE

Ecotricity has announced the sale of its Electric Highway, the world’s first national electric vehicle (EV) charging network, to GRIDSERVE. The buyer is already increasing its investment in the Electric Highway by replacing all existing pumps on the network with the latest tech, including contactless payment.

Established in 2011, the Electric Highway played a key part in starting Britain's EV revolution, allowing early adopters to drive across the whole UK. Over a ten-year period, EV charging has progressed from 3-pin plugs and 7kW to the current state-of-the-art 350kW standard, which is capable of providing 100 miles of charge in approximately five minutes. The typical range of an EV battery has also jumped from 80 miles to more than 300.

Ecotricity has explained that the sale will enable it to pursue new innovations like Britain’s first Green Gasmill, a revolutionary process of making natural gas for the grid from grass. Dale Vince, OBE, founder of Ecotricity also commented that “we’ve reached an interesting point in the electric car revolution – exponential growth is just round the corner, while the technology for charging has evolved into one ruling standard, offering charging speeds that are almost on par with fossil powered ones, where you top up once every week or two".

REGO prices are 50% higher than January 2021 as electricity prices revert to pre-pandemic levels

According to Cornwall Insight’s Green Certificates survey for Fuel Mix Disclosure (FMD) years 2020-21 up to 2023-24, REGO prices have increased by half when compared to January 2021.

REGO growth will persist with prices projected to continue to rise over the next year, as electricity costs return to pre-pandemic levels. The UK's 2020 lockdowns caused electricity demand to fall to record low levels, leading to a corresponding drop in wholesale electricity prices.

Luke Ansell, analyst at Cornwall Insight, commented that “demand outlook was also positive among participants, with 64% reporting increased demand for REGO backed supply products in the past three months”. Ansell explained that survey respondents cited "end-of-year supplier buying, uncertainty surrounding the future acceptance of European Guarantees of Origins (GoOs) and greater climate ambition from businesses as bullish demand drivers.” Finally, Ansell then added that “during the survey, we asked participants if they traded REGOs alongside power in Power Purchase Agreement (PPA) deals. 59% of respondents said they had purchased REGOs and power in PPAs at least occasionally. At the same time, the same percentage indicated there was no price differential between REGOs traded within PPAs and REGOs traded".

Four projects have cleared initial screening for Ofgem’s Electricity Network Innovation Competition

Four projects have passed the initial screening of the Electricity Network Innovation Competition (NIC), with network operators seeking £29 million for flexibility and green heat. Ofgem started the competition alongside RIIO price controls to fund new technologies, operating and commercial arrangements, as well as network development.

Electricity North West (ENW), Delta-EE and Ricardo Energy and Environment's, Smarter Heat project
Smarter Heat can help understand whether a "connect and manage" approach can serve as an effective route for the increasing uptake of heat pumps, domestic solar and EV charging. The DNO can use the demand side variable capacity in the network and its innate flexibility to manage the added load of low-carbon heat technology. The project requires £5.4 million of NIC funding to reach its total cost of £6 million.

ENW's BiTraDER project
Through BiTraDER, ENW is exploring the potential for a merit order stack trading market between Distributed Energy Resources (DERs). BiTraDER will help to create a transparent trading platform and specific rules to facilitate bilateral trading of DER capacity. This will add value to the flexibility market, whilst stimulating its growth. The DNO is looking for £5.4 million of its £6 million total cost.

Northern Powergrid, Delta-EE and TNEI’s Community DSO project
This project will trial Smart Local Energy Systems with localised management of low voltage levels, and will be organised into interconnected "cells". Communities will be able to step into the shoes of DSO service providers within these "cells", ensuring that benefits are fairly distributed among consumers. Community DSO has requested £11 million of NIC funding, with a total project cost of £12 million.

Western Power Distribution’s EQUINOX (Equitable Novel Flexibility Exchange)
In collaboration with Octopus Energy, SP Energy Networks, Guidehouse and PassivSystems the EQUINOX project seeks to demonstrate:

  • how innovative commercial arrangements may encourage customers to load shift their demand;
  • how much flexibility can be released from thermal batteries and heat pumps; and
  • inform DNOs on how to eliminate barriers to the adoption of greener heat technology for residential consumers, and to manage shifting demand.

£7.2 million has been requested from the NIC to help fund this £12.2 million project.

E.ON's EV salary sacrifice scheme aims to increase affordability

Following its company car provision shifting to 100% electric in 2019, E.ON has announced an electric vehicle salary sacrifice initiative. E.ON has created the EV scheme with Lex Autolease and it allows drivers without company vehicles to access EVs. The initiative also offers employees the chance to purchase a home chargepoint through its e-mobility business unit, E.ON Drive, as an additional salary sacrifice benefit, as well as reduced Income Tax and National Insurance contributions. This is designed to make EVs more affordable.

According to E.ON, those drivers who have already signed up are set to save an average of £14,445 over three years. These savings are made through drivers forfeiting a portion of their pre-tax salary in return for an EV, benefiting from the low benefit-in-kind taxes on EVs.

Chris Norbury, E.ON’s chief people officer, commented that “as we’re helping our customers to be more sustainable at home, in business and across entire communities with smart, personalised and sustainable solutions, it’s only right that we continue to enable our employees to make a direct personal contribution to cleaner air too”.

NewMotion aims for a 'seamless' EV charging experience through a roaming agreement with Mer

NewMotion continues to bolster its roaming contracts with the announcement of its latest collaboration with Mer. Having recently launched in the UK, Mer seeks to improve roaming for British EV drivers in an effort to make EV charging as seamless as possible. This partnership also hopes to combat EV range anxiety, with NewMotion already in possession of 200 European roaming partners and 20 in the UK.

The new agreement will mean that drivers who are already using the NewMotion or Shell's Recharge charge card or app (as NewMotion was bought by Shell in 2017) can now charge their EV at one of Mer's 160+ existing chargepoints.

UK law makers have also started looking into improving EV roaming. To that end, the government opened a consultation in February to improve the EV charging experience for consumers. This consultation provided several proposals for interoperability and roaming, including enacting laws to make chargepoint providers open up their networks or continuing to allow the market to lead, and the creation of a government-controlled interoperable roaming platform.

Green light for 450MW pumped-hydro scheme at Loch Ness

Scottish ministers have given Intelligent Land Investments (ILI), a Scottish energy developer, the green light for its proposed 450MW pumped hydro project at Loch Ness. The proposal, which has been named "Red John", is set to cost approximately £550 million.

In 2017, ILI announced its intentions to get planning consent for 3 pumped hydro sites in Scotland with a total capacity of roughly 2GW. Red John will be the first and is set to become a project of national significance, as one of Scotland's most substantial renewables projects.

ILI also intends to develop the schemes and then sell them at construction stage, having done so with its past projects.