Energy and Utilities Update | 14 August 2020

Written on 14 Aug 2020

Welcome to our latest update on regulatory and market developments in the energy and utilities sector. In this week's edition we look at calls for government to implement a hydrogen strategy, government's implementation plan for electricity markets, European Commission's roadmaps seeking views on renewable energy and energy efficiency directives, and more.

Calls for government to implement a hydrogen strategy

The Environmental Audit Committee, has called for the government to urgently implement a clear hydrogen strategy to avoid the UK losing its competitive advantage in this sector. The role of the Committee, which is a select committee of the House of Commons, is to examine how government policies and programmes might affect the environment and sustainability. The chair of the Committee, Phillip Dunne MP, has written to Alok Sharma, the Secretary of State for business and energy, advising the government to use the autumn budget and spending review as an opportunity to set out this strategy.

During the Committee's inquiry into hydrogen, it heard evidence that the UK has both the technology and expertise to scale up low-carbon hydrogen. However, Dunne said that the lack of a clear vision for hydrogen from the government risks holding back the growth of the sector. He advised that much more investment is needed, coupled with a clear hydrogen strategy to ensure the greatest returns. He cited Australia, Japan and South Korea as examples of countries which have already set ambitious hydrogen strategies and also pointed to the recently published EU hydrogen strategy.

This message echoes the words of Dr Angie Needle, Director of Strategy at Cadent, who urged the government to adopt a more robust hydrogen strategy (as we have previously reported). The need for a clear hydrogen strategy has also been supported by David Smith, chief executive of Energy Networks Association – a further demonstration of a real trend amongst experts in the energy industry to push for the development of this sector.

 Government publishes implementation plan for electricity markets

Against the backdrop of increasing tension between the shift towards the decarbonisation of the electricity supply and the need to maintain a secure supply of electricity, the government has published an electricity market implementation plan. The plan provides an outline of the electricity market in Great Britain and sets out measures the government has taken (and will continue to take) in order to address identified market distortions and failures.

The measures highlighted in the plan as being central to both the security and decarbonisation of supply are:

  • the removal of price caps;
  • imbalance settlement arrangements;
  • interconnection;
  • energy storage and demand side response;
  • enabling self-generation;
  • promoting energy efficiency;
  • regulated pricing; and
  • the capacity market.

European Commission publishes roadmaps on review of renewable energy and energy efficiency directives

Following the publication of the European Commission's roadmap which sought views on its offshore renewable energy strategy, the Commission has now published roadmaps which seek views on both the Renewable Energy Directive and the Energy Efficiency Directive. These directives play an important part in the European Commission's Green Deal, which aims to increase the EU's climate ambitions.

The roadmap for the Renewable Energy Directive takes the form of an inception impact assessment. This is a form of project plan where the Commission considers the potential impact of its proposals to be particularly great and therefore requires greater detail than a roadmap. The inception impact assessment will assess whether the EU's renewable energy targets should be increased and whether the directive otherwise would need to be modified in order for the EU to meet its climate ambitions.

For the Energy Efficiency Directive, a combined evaluation roadmap and inception impact assessment will assess the adequacy of the existing directive, taking into account existing energy efficiency targets, policies and measures set out in the national energy and climate plans.

There is a seven-week period for public feedback on the roadmaps, ending on 21 September 2020.

Government awards R&D funding packages to projects which could assist with net-zero transition

In a bid to progress towards the UK's net zero target, the government has awarded research & development funding to 17 projects through the UK Research & Innovation's Strength in Places fund. Recipients of this funding include the South West Floating Offshore Wind Accelerator, which is working to pilot floating offshore wind farms in the Celtic Sea. The 17 projects will each receive up to £50,000 to support project development towards a detailed bid for a further £10-50 million (each) of funding, which will be available in the fourth quarter of 2020.

The Strength in Places fund is a pathfinder programme that invests in projects to boost research and innovation capacity in specific areas of the UK where economic growth led by clean innovation lags behind the national average. This latest announcement comes after seven projects were awarded stage 1 funding in June 2020.

Gridserve buys UK's first subsidy-free solar farm

Gridserve, which builds, owns and operates hybrid solar assets, has purchased Clayhill hybrid solar farm, which was the UK's first subsidy-free solar farm, from renewable energy company Anesco.

The 10MW solar farm is located in Bedfordshire and includes 6MW of co-located battery storage. Gridserve have outlined that a major driver behind the acquisition is the delivery of power to Gridserve's electric forecourt in Braintree. Set to open later this year, the forecourt combines renewable energy, battery storage and rapid chargers to meet the needs of electric vehicle drivers.  Anesco will provide operation and maintenance services to the forecourt under a 20 year agreement with Gridserve.

Electric vehicle developments this week

Bus2Grid

A bus garage in North London has fitted vehicle-to-grid (V2G) technology as part a project led by SSE Enterprise and the Mayor of London's office. The project is funded by the government, Innovate UK and the Office for Low Emission Vehicles. It is London's first large, scale demonstration of V2G technology in electric bus depots.

Bus2Grid has adapted 100 buses for bi-directional charging which allows the buses to charge and export energy, alongside an aggregation platform which enables the bus batteries to interact with the energy system. The garage in Northumberland Park has space for up to 28 double-decker buses to be charging at any one time. SSE claims that when the garage is at full capacity, it can provide 1MW of electricity.

Throughout the trial, the project will explore the carbon impact, commercial value and social benefits of V2G charging within the bus industry. It hopes to demonstrate business models and routes to market which will encourage the growth of V2G services in the e-bus market.

Connected Kerb

Connected Kerb, the electric vehicle (EV) infrastructure company, has announced the installation of infrastructure to support at least 130 EV charging points  on a 250-hectare site in Wichelstowe, where around 3,000 homes are expected to be built. It is hoped that access to EV charging facilities will encourage potential home owners to choose EVs as their primary mode of transport. Of the 130 charging points across the development, 20 active chargers will be installed immediately into shared parking bays.

Spin

Spin, an electric scooter sharing company acquired by Ford in 2018, has set a target to become carbon negative by 2025. The company currently operates in 62 cities across the USA and recently launched in Cologne, with a wider rollout across Germany and an expansion into other European markets planned in the coming years.

Spin aims to cut the carbon emissions associated with manufacturing and operating its scooters and ensure that each scooter has a lifespan of at least two years. In reaching these goals, Spin aims to transition to:

  • using 100% renewable electricity to power its scooters;
  • to 100% plug in-hybrid and battery electric vehicles; and
  • 100% landfill diversion.

If these steps do not lead to a positive or net-zero carbon footprint, Spin has committed to investing in carbon offsetting.

Voi

Voi, the Swedish e-scooter giant, has announced a year-long pilot e-scooter scheme in Cambridgeshire and Peterborough to begin in September 2020. It is estimated that the scooters will mitigate 395 tonnes of carbon emissions within a year. A decision on extending the roll-out will be made by August 2021.

BT Openreach

Digital network business BT Openreach has placed an order with Vauxhall for nearly 300 EVs as part of its commitment to electrification. The order represents a move away from the use of diesel vans as part of its 27,000 fleet of vans.

New report by O2 states 5G will play a huge role in decarbonising energy

O2 have published a report entitled "A Greener Connected Future" which suggests that the roll out of 5G technology could mitigate 269 megatonnes of emissions over a 15-year period, a figure equivalent to the UK's entire domestic emissions in 2018. The benefits would be felt across most industries, in including some of the most carbon heavy, such as those within the utilities and home energy, transport and manufacturing sectors.

The use of 5G in homes could lead to smart heating systems which the report suggests could cut domestic energy use by 20%. It could also allow for the smarter transfer of EV energy back to the grid and would avoid commuting and business travel by enabling people to work from home more effectively. In factories, increased automation could improve both efficiency and productivity and potentially remove 40 megatonnes of emissions from the economy by 2035.

O2 have stressed the need for government investment and the inclusion of 5G in the government's Covid-19 recovery plans to ensure that these proposed benefits become a reality.