Energy and Utilities Update | 1 April 2020

Written on 1 Apr 2020

Welcome to our latest update on regulatory and market developments in the energy and utilities sector. In this edition we look at the new E.on partnership with Kraken Technologies, a drop in energy demand following the Covid-19 lockdown, the Department for Transport temporarily suspending franchise agreements, and more.

E.on partners with Kraken Technologies

E.on has formed a partnership with Kraken Technologies as part of its plans to reinvent itself as E.ONnext. Kraken Technologies is part of the Octopus Group and offers a cloud-based energy platform for interacting with customers and the wider industry. E.on plans to use the Kraken platform to deliver a more customer-centric and cost-efficient service.

Customers of Npower, which is now part of the E.on group, ill be migrated to E.ONnext (currently a wholly owned E.on subsidiary) this year, followed by E.on's customers in 2021.The deal is estimated to be worth between £30 and £40 million.

One million of Octopus' customers are already using the Kraken platform, along with customers of Good Energy's, which adopted the customer services platform in October last year.

Paul Massara from Utility Week said that if this move proves successful, the accessibility of the Kraken platform could significantly reduce barriers for new entries into the market.

Read more about this here (£).

Ofgem suspends 2020 work programme due to Covid-19

Ofgem, the energy regulator, has announced that it is temporarily suspending its work plans for 2020 and will review these in the light of the Covid-19 pandemic. The regulator is also pausing the publication of new information on its website, with the exception of legally required publications.

Ofgem has stated that its priority is to protect customers and those who work in the industry by focusing on reliable energy supplies and addressing customer needs, particularly those of vulnerable customers.

The suspended work plans cover the following arears: the feed-in-tariff, Renewable Energy Guarantees Origin certificates, the Smart Export Guarantee, Renewable Obligation Certificates, distribution and transmission of electricity and gas.

Read more here.

Gnergy's customers move to Bulb

Following the announcement last week that Gnergy has ceased trading, Ofgem has confirmed that Gnergy's customers will be transferred to Bulb Energy.

Bulb Energy, the green gas and energy supplier, will absorb all of Gnergy's 9,000 domestic customers along with its small number of non-domestic customers.

Ofgem said customers will be offered a competitive tariff and all outstanding credit balances will be honoured.

Read more here (£).

Energy demand drops following Covid-19 lockdown

On 23 March, the UK entered a state of lockdown in an attempt to prevent the spread of the Covid-19 virus.

The measures introduced require individuals to work from home wherever possible and prevent the UK population from leaving their homes without a "reasonable excuse", such as for essential shopping, to take exercise once a day and to care for a vulnerable person.

These unprecedented restrictions have led to changes in the demand for electricity, with demand falling to an average of 31.2GW on 24 March compared to an average of 33.92GW in March 2019.

Electron, an Entech company, predicts having observed data received from European countries who began a lockdown before the UK, that the impact on demand will increase in coming weeks.

At the same time, it is predicted that domestic demand will increase and usage patterns will shift as weekday consumption begins to largely resemble weekend use as a result of increased working from home.

Read more here.

Energy white paper still expected in spring

The long-awaited energy white paper, to be published by the Department for Business, Energy and Industrial Strategy (BEIS), is expected to set out practical steps for the energy industry to work towards the legally binding target of net-zero carbon emissions. The white paper was originally expected in summer 2019.

On 25 March a BEIS spokesperson stated that the white paper is still expected in spring of this year. Whether this comes to fruition is to be confirmed, however, as the Covid-19 pandemic is causing the re-direction of all non-essential parliamentary resources and MPs are not due to reconvene until 21 April.

Read more here.

Department for Transport temporarily suspends all franchise agreements

On 23 March, the Department for Transport (DfT) announced that it would be suspending all franchise agreements temporarily, following a 70% drop in the number of rail passenger journeys as people stay at home amid the Covid-19 pandemic. A franchise agreement is a contractual relationship between the Secretary of State for Transport and rail operators.

The emergency measures taken by the DfT are expected to be in place for six months, and are aimed at preventing the potential insolvency of rail operators by shifting revenue and cost risks onto the government. Season ticket holders have been told to contact their operator for details on how to claim refunds on their season tickets if they are self-isolating and no longer commuting into London.

Read more here.

Foresight Belltown Joint Venture to develop UK onshore wind projects

Foresight, an independent infrastructure and private equity investment manager, and Belltown Power Limited, a renewable energy power company, have formed a joint venture (JV) to develop onshore wind projects in the UK. The sites are expected to be mainly in Scotland or Wales, as these locations have been identified by the JV as having strong potential for wind development.

The JV is aiming to develop up to 300MW worth of generating capacity, and will utilise Belltown's existing brand to do so. The pair have stated that they will consider merchant-only, power purchase agreements and contracts for difference for project development.

Read more here.

Greencoat Renewables makes its debut into the continental European Market

Greencoat Renewables, a renewables investment firm, has announced that it has acquired a 51.9MW portfolio of three windfarms in France from John Laing Group, an investor, developer and operator of infrastructure projects. The three windfarms qualify for the French tariff regime, and have a fixed price Feed-in-Tariff.

The deal is worth €30.3 million, and will close following regulatory approval. The acquisition is Greencoat's first outside of Ireland, and brings its total installed capacity base to 528.1MW.

Read more here.