Energy and Utilities

The Energy Transition | Power prices reach record high, offshore transmission regime's next steps, geothermal energy first in powering UK homes

Published on 8th Jan 2021

This week we look at the next steps revealed by Ofgem and BEIS in their review of the offshore transmission regime, funding for the world's first net-zero industrial cluster, a £213m government fund to tackle Covid-19 and the climate crisis, and more.


Six projects across the UK win funding to develop world's first net-zero industrial cluster

Six 'Industrial Cluster' regional projects in the West Midlands, Tees Valley, North West, Humber, Scotland and South Wales have been allocated a share of an £8 million government fund by UK Research and Innovation.  The funding, which has been granted as part of the government's £170 million Industrial Decarbonisation Challenge, is intended to support the creation of the world's first net-zero emissions industrial zone. A net-zero industrial zone is a regional area within which organisations and industries are working towards net-zero emissions in industrial activities.

The six winning projects are now expected to produce detailed plans for carbon emission reduction across major industries, using clean energy, hydrogen technology and carbon capture, usage and storage (CCUS). One project in the North West is titled "the Net Zero NW Cluster Plan" and is headed up by Peel Environmental. The project is aimed at engaging regional industry and public sector bodies in the investment, technology, infrastructure changes and sequencing required to fulfil the net-zero target. The project hopes to create 33,000 new jobs in the region and generate £4 billion in investment funds.

SPEN invests £2.3m in 3D mapping technology to improve network resilience

SP Energy Networks (SPEN) has invested £2.3 million into technology that creates 3D maps of electricity lines. This cutting edge technology allows small planes to be used to fly over the power network and create 3D maps of electricity lines, with the aim of increasing the resilience of these lines throughout the winter months and beyond.

SPEN has undertaken extensive trials of the 3D LiDAR technology, which was developed by geo-data firm Fugro. The virtual model will provide a full 3D view of buildings and trees, replacing the traditional onsite surveys that required the use of handheld measuring devices. Liam O’Sullivan, SP Manweb Director at SP Energy Networks, said: “The landscapes around our network are constantly changing, which can cause issues if we are unable to identify potential faults or hazards ahead of time. The LiDAR technology creates agile and precise maps that help us predict everything from tree growth to new infrastructure required".

Ofgem and BEIS reveal next steps in offshore transmission review

Ofgem and the Department for Business, Energy and Industrial Strategy (BEIS) have published an open letter announcing the next steps in their joint review of the offshore transmission regime. The review was launched in July 2020 with the aim of ensuring that the transmission connections for offshore wind generation are delivered in the most appropriate way, in light of the government's increased ambitions for offshore wind as part of its net zero targets. This joint response follows an open letter published in August to developers of offshore wind generation, electricity transmission licensees, and interested parties calling for their views.

The letter confirms that the review will be split into three main work streams: "early opportunities"; "pathway to 2030"; and "enduring regime". A fourth cross-cutting work stream on multi-purpose interconnectors will also be included in the review. The first stage will look at relatively advanced projects and consider whether there are "flexibilities and minor changes to regulations that could allow them to take a more coordinated approach under the current regime". Ofgem will seek to consult on possible changes during 2021.

Ecotricity to power homes with geothermal energy in UK first

Ecotricity has announced that a power purchase agreement has been signed with Geothermal Engineers Limited for the production and sale of geothermal electricity for the first time in the UK. The geothermal site in Cornwall will deliver 3MW of base-load electricity to Ecotricity, which is expected to power 10,000 homes per year. The signing of the agreement follows the most recent round of successful testing of geothermal energy in Cornwall and the site is expected to be fully operational in 2022. Dale Vince, founder of Ecotricity said: "We’re pleased to be part of this project and to add the power to our customer’s energy mix. It has a big role to play in our plans to decarbonise the country."

In addition to the generation and sale of geothermal electricity from the site, plans for a geothermal biome to be located on the site have been submitted, which will allow the Cornish Geothermal Distillery Company to use renewable heat to mature and distil rum.

£213m government innovation fund to tackle Covid-19 and climate crisis

The government has announced a £213 million investment to upgrade the UK's scientific infrastructure. The investment will fund research to help the UK respond to global challenges including Covid-19 and achieve net-zero carbon emissions.

Researchers at 43 of the UK’s Medical Research Institutes will be allocated £29 million of the investment for new equipment, including supercomputers to examine and track infectious diseases. A further £25 million will be allocated to test innovative technologies at UK universities, including technologies that are designed to cut carbon emissions, such as a floating offshore wind turbine testing facility at the University of Plymouth and airborne sensors in London to monitor greenhouse gas emissions.

National Grid ESO issues three Electricity Margin Notices as temperatures drop

National Grid ESO has issued three Electricity Margin Notices (EMNs) during the week commencing 4 January due to a combination of colder temperatures, low renewables output and generator availability.

EMNs were issued on 7 and 8 January in relation to a system margin shortfall of 1157MW then 239MW (respectively) for the period between 16.00 and 19.00 today (8 January). On 5 January, the operator issued an EMN for the period between 16.00 and 19.00 on 6 January. The 5 January EMN was cancelled at 11.25 on 6 January, with the ESO explaining that its “buffer of spare capacity has been restored to a sufficient level”.

Last year, the ESO issued and then withdrew EMNs for 4 and 5 November and for 6 December. Before this, the last such warning was issued in 2016. The relative frequency of EMNs being issued over the past few months demonstrates the balancing challenges and price volatility created by the increasing amount of renewables in the electricity system.

Power prices reach record high as tight margins drive N2EX beyond £1000/MWh

The N2EX UK day-ahead power auction reached a record high this week as low wind and cold weather tightened generation margins. Between 17:00 and 18:00 GMT on 6 January, the N2EX power price reached 1000.04GBP/MWh, the highest hourly price seen on the auction.

The price spike comes as wind generation is expected to decrease further to levels significantly below the norm for January, and temperatures remaining around 4-5 degrees below normal.

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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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