Energy and Utilities

The Energy Transition | Sanctions and new energy innovation projects

Published on 7th Mar 2022

This week, we look at how UK decentralised and renewable energy generators might be affected by sanctions, Ofgem launching 40 new energy network innovation projects, Britain's first ever zero emission zone, and more.

Ukraine crisis: How might UK decentralised and renewable energy generators be affected by sanctions?

Please read the latest from Osborne Clarke on the wide-ranging sanctions imposed on Russian individuals and entities as a result of the invasion of Ukraine and the potential impact on the energy sector here.

Energy networks launch 40 new innovation projects

Ofgem has announced the launch of 40 new innovation projects in order to quicken the transition to net zero at the lowest cost to consumers. The projects are the first under Ofgem's new Strategic Innovation Fund (SIF) partnership with Innovate UK. Each project will receive up to £150,000 to carry out the 'discovery' phase of their proposals, which will last for two months and allow for each projects' potential to be ascertained. The aim is to  address some of the largest challenges that energy networks face in the net zero journey, with a specific focus on: heat, zero emission transport, data and digitalisation, and whole system integration.

The projects are wide ranging and focus on areas such as the future uses of hydrogen in our energy system, the ability of nuclear power to generate hydrogen and the means of achieving large-scale storage of heat. 'Eye in the Sky' is one of the 40 projects and focuses on how satellite data can be used in emergencies (such as flooding or wildfires), for planning electricity grid repairs, keeping equipment and people safe and helping to ‘keep the lights on.’ When the initial two-month phase ends, those projects that have shown the greatest potential will be awarded up to £500,000 to take their ideas forward. This will be followed by a further selection process, with successful projects receiving further funding and being able to carry out large-scale demonstrations of their technologies.

Matt Hastings, Deputy Director of the Ofgem SIF programme at Innovate UK has said, "[t]he [SIF] is a five-year programme with up to £450m available to promote energy network innovation. Ofgem and Innovate UK are working to identify further innovation challenges for round two of the SIF, working closely with all energy networks, network users and consumers, and will issue another call for proposals in the autumn of 2022."

Britain’s first ever zero emission zone launched in Oxford  

Last week saw the launch of Britain's first ever zero emission zone (ZEZ) in Oxford. The ZEZ has started out as a small-scale pilot which will provide insight for Oxfordshire County Council and Oxford City Council prior to the introduction of a lager ZEZ covering most of Oxford city centre in 2023 (subject to further public consultation). The ZEZ pilot, operating between 7am-7pm all year around, will charge petrol and diesel vehicles (including hybrids) daily, whilst zero emission vehicles such as electric cars will be able to drive within the pilot area at no cost.

The charges will vary between £2 to £10 each day and will depend on the emission levels of the vehicle.

Those driving polluting vehicles can pay for their charges up to six days in advance, on the day that they have driven into the zone, and up to six days after the vehicle has been driven within the zone. There will be some exemptions and discounts available for businesses and residents within the zone. The funds gathered will be utilised to cover implementation and running costs of the scheme, with any remaining funds, amongst other things, going towards helping residents and businesses transition to zero-emission vehicles.

Councillor Duncan Enright, Oxfordshire County Council’s Cabinet Member for Travel and Development Strategy, said, “[t]he ZEZ pilot is a very important step towards our aim of moving towards a zero carbon transport system in the county," and that “[p]oor air quality is a public health risk for everyone. The ZEZ will reduce toxic air pollution in our city and while making Oxford a safer, cleaner and better place for people who live and work here and for those who visit.”

House of Commons committee warns of 'no clear plan' for funding net zero

A report by the House of Commons Public Accounts Committee (PAC) has warned that the government has "no clear plan" for funding the transition to net zero.

In October 2021, over two years after the UK enshrined in law its commitment to bring all greenhouse gas emissions in the UK to net zero by 2050, the government published its net zero strategy (reported on in an earlier edition of the Energy Transition). However, according to the PAC, the government is yet to answer the key questions concerning how it will fund the transition to net zero, including how it intends to replace significant income from taxes such as fuel duty, and how levies and taxation will operate.

To deliver its targets, the government's net zero strategy requires collaboration between the UK government, local government, businesses and consumers. The PAC report warns that "a top-down strategy from government won't deliver on its own", and that the government cannot rely on rapidly changing consumer behaviours without a clear plan for how consumers will be incentivised and supported to change their behaviours.

The PAC has therefore called for the government to provide clarity to business and consumers on a number of issues, including how it will ensure consumer engagement and buy-in, and how the civil service and private sector will be equipped with the necessary technical skills to facilitate the transition to net zero. Further, the report notes that in order to ensure that domestic emissions are not merely shifted offshore to other countries, the government must better understand the emissions impact of international supply chains.

Dame Meg Hillier MP, Chair of the Public Accounts Committee, said, "Government is relying heavily on rapidly changing consumer behaviours and technological innovations to drive down the costs of green options, but it is not clear how it will support and encourage consumers to purchase greener products or incentivise businesses and drive change."

'World's largest' biomethane refuelling station opens in UK

CNG Fuels, the UK's leading provider of renewable biomethane for heavy goods vehicles (HGVs), has announced the opening of the 'world's largest' biomethane refuelling station in Avonmouth. 

The refuelling site has the capacity to refuel up to 80 HGVs per hour using 14 high-speed dispensers, making it the largest public access biomethane refuelling station in the world. By dispensing only biomethane produced from food waste, the site is capable of cutting up to 70,000 tonnes of CO2 emissions every year. It is hoped that this will go some way towards decarbonising the UK's road haulage sector which, according to a report by the Department for Transport, is currently responsible for 18% of total UK road transport emissions.

Philip Fjeld, CEO of CNG Fuels, said, “Brands across the country are under more and more pressure to cut emissions from fleets and renewable biomethane is the only commercially viable solution on the market today. We are continuing to see high increases in demand and with the recent news of the 2040 ban on new diesel HGV’s, we expect the pace of demand to continue."

Last year, CNG Fuels also announced plans to host hydrogen fuel trials across the UK, the first of which is due to begin this year.

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