Policy update 2018

This is an excerpt from the minutes from our meeting in October 2018

Insights from Georgina Penfold, The ICON

1. Proposed Changes to Electricity Network Charging

 

  • Network access charges (for either demand or generation) are currently on a first come first served basis, yet not all sites are using all their capacity or they have more capacity than they have permission for.  Transmission costs are expected to increase by 50% in the next 5 years.
  • Ofgem is consulting on revising how distribution and network costs are calculated and passed through to consumers: the network is constrained so we either need to invest or change how we use it.  If the outcome will require a significant Code Review then this will be end of 2018/early 2019, with options developed through 2019.
  • The options Ofgem have put forward are:

i)     Firmness: connection agreed and no-one can mess with it.  Might be wiling to reduce demand with notice (therefore becoming a flexible connection (for less money))

 

ii)    Time profile: similar to the firm option, but flexible only within fixed timescales (eg when your building is closed)

 

iii)   Fixed duration: limited agreement (eg 15 years) then renegotiated – good for leaseholders.

 

iv)   Short-term access – only connected for a limited time (eg temporary installation)

 

v)    Shallow access: to do with generation

 

  • Forward looking charges – for example you pay to expand the site, even if lots of sites benefit thereafter (socialise the cost).  This could maybe on a capacity or consumption basis.  It would also possibly mean the end of TRIADs (which we’ve become too good at!)
  • CMP274 Time of Use Tariff is coming c. 2021-2023.  It will allow for 2 peaks (instead of the 3 winter peaks in TRIAD): one in the morning and one in the evening, Monday to Saturday (not Monday to Friday).  This will hit for example breakfast clubs, gyms, leisure centres, etc.

 

2. New (Voluntary) Emissions Reporting Scheme

CRC goes next year.  The private sector will have a streamlined reporting process through their financial returns to Companies House.  For the public sector, BEIS has introduced a voluntary Emissions Reduction Pledge: it is likely that this will become mandatory post-Brexit with transport and Scope 3 added in.  Don’t let this monitoring slip – it’s important!

 

 

3. Medium Combustion Plant Directive (and Specified Generators Regulations)

 

This is a European Directive to control CO2, SOX and particulates.  It covers anything that burns – eg diesel back-up, CHP – from 1-50MWth.  It applies to new plant from 20.12.18, which must be registered with the Environment Agency, and will apply to all existing plant above 5MW from 2024.  The Directive requires you to monitor and report on emissions: urban targets are stricter than in rural areas.  Everyone will have to comply, unless the system is properly only used for back up (<50hours/year)

 

 

4. BREXIT

 

Very little will change with regard to gas and electricity trading and carbon capture, even if there’s no deal.  The carbon floor price (as specified in the EU ETS) now flows into HMT: further details will be in the budget.

 

 

5  Unidentified Gas

 

Until last year, Ofgem kind of guessed how much gas was lost in the system and we all contributed.  The introduction of a new computer system highlighted that the old calculations had been way out.  A new method is being introduced (which will appear as a new line on gas bills) but the results are highly variable, and suppliers are having difficulty communicating about it.  The suppliers, led by Total & Gaz Prom, are getting together to lobby Ofgem to stick with the old calculation method until the new method is improved.  A task group is being set up.

 

 

6. Also look out for…

 

  • Autumn budget (19th October)
  • Environment Act (‘autumn’) – with new enviro watch dog post-Brexit
  • Helm Review announcement (before 25th October) – could be pushed back a couple of weeks? (Check out the ICON webinar)
  • Capacity Market Review (due 18th December)

 

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