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Future Charging and Access programme – consultation on refined residual charging banding in the Targeted Charging Review

In November 2018, we published our minded-to decision and draft Impact Assessment on the Targeted Charging Review (TCR) covering proposed reforms to residual charges and non-locational Embedded Benefits. In June 2019, we consulted on further matters, including updated analysis on the Capacity Market and system costs, and the findings of the Balancing Services Charges Task Force.

We received over 130 responses to our minded-to decision, and a further 23 representations to our supplementary consultation. Having considered these responses, we wish to update stakeholders on refined proposals for reform of residual charges and provide the opportunity to comment on them, before we make our final decision.

Alongside this letter, and following requests from some industry participants, we are also publishing a sensitivity analysis we have undertaken on the implications of our proposed reforms on renewable generation.

We welcome any stakeholder feedback on the proposals and additional analysis outlined in this letter by email to TCR@ofgem.gov.uk by 25 September 2019.

Great Britain power system disruption review

Details

On Friday 9 August 2019 a power disruption resulted from the operation of Low Frequency Demand Disconnection relays on the Great Britain power system at about 4.54 pm. It impacted hundreds of thousands of customers, and caused significant secondary impacts in particular to the transport network. Though demand was fully restored within 90 minutes, the secondary impacts continued to be felt for much of the day.

The Secretary of State for Business, Energy & Industrial Strategy has commissioned the Energy Emergencies Executive Committee (E3C) to undertake a comprehensive review of the incident. The review should identify lessons and recommendations for the prevention and management of future power disruption events. In particular E3C will:

  • assess direct and secondary impacts of the event across GB electricity networks
  • Identify areas of good practice and where improvements are required for system resilience
  • consider load shedding in regard to essential service customers and prioritisation
  • consider timeliness and content of public communications during the incident
  • make recommendations for essential service resilience to power disruptions

E3C will submit a final report to the Secretary of State within 12 weeks, with an interim report within 5 weeks. These will be published here. BEIS will provide the secretariat for the review.

E3C is a partnership between government, the regulator, and industry, which ensures a joined up approach to emergency response and recovery.

Documents

French regulator puts EDF Flamanville nuclear plant on safety watch

PARIS (Reuters) – French nuclear regulator ASN said it has put EDF’s Flamanville 1 and 2 reactors under increased surveillance following a series of shortcomings in maintenance and contractor oversight

The ASN’s action is the latest in a long series of technical and operational issues that have bedevilled EDF in recent months and raised new concerns about the state-controlled utility’s safety culture.

The regulator said in a statement there had been a high number of significant shortcomings in the Flamanville plant’s maintenance and in the oversight of contractors in the plant, as well as insufficient quality of documentation. It added that it had summoned the plant’s director and ordered him to submit an action plan to improve plant operation.

EDF (EDF.PA) did not dispute the ASN’s ruling.

“We accept the ASN’s diagnosis and we accept its decision. That is why we submitted an action plan in August to resolve the problems,” an EDF spokesman said.

EDF’s Belleville nuclear plant on the Loire river has also been under increased surveillance since 2017.

The problems at the Flamanville 1 and 2 reactors are not directly related to the many problems with a third nuclear reactor that EDF is building on the same site. Flamanville 3 is a decade behind schedule and its cost has tripled to nearly 11 billion euros and is likely to rise further.

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French regulator puts EDF Flamanville nuclear plant on safety watch

PARIS (Reuters) – French nuclear regulator ASN said it has put EDF’s Flamanville 1 and 2 reactors under increased surveillance following a series of shortcomings in maintenance and contractor oversight.

The ASN’s action is the latest in a long series of technical and operational issues that have bedevilled EDF in recent months and raised new concerns about the state-controlled utility’s safety culture.

The regulator said in a statement there had been a high number of significant shortcomings in the Flamanville plant’s maintenance and in the oversight of contractors in the plant, as well as insufficient quality of documentation. It added that it had summoned the plant’s director and ordered him to submit an action plan to improve plant operation.

EDF (EDF.PA) did not dispute the ASN’s ruling.

“We accept the ASN’s diagnosis and we accept its decision. That is why we submitted an action plan in August to resolve the problems,” an EDF spokesman said.

EDF’s Belleville nuclear plant on the Loire river has also been under increased surveillance since 2017.

The problems at the Flamanville 1 and 2 reactors are not directly related to the many problems with a third nuclear reactor that EDF is building on the same site. Flamanville 3 is a decade behind schedule and its cost has tripled to nearly 11 billion euros and is likely to rise further.

Separately, EDF said on Tuesday it had found problems with weldings on the steam generators of some existing reactors, sending its shares down 6.8% on fears that the faults could lead to reactor closures.

The shares recovered some of the losses to rise 5% on Wednesday. They are down 28% over the past 12 months, making EDF the second-worst performer in the Stoxx European Utilities index .SX6P

SAFETY CULTURE

“There is a chain of control from reactor builder Framatome, to nuclear plant operator EDF and regulator ASN, but it has been demonstrated over and over again that this chain of control is malfunctioning. Every few months there is a new problem,” World Nuclear Industry Status Report author Mycle Schneider said.

Schneider said there had been no follow-up to a 2018 French parliament investigation into nuclear safety and security.

A parliament report reut.rs/2kE2IQ7 published in July 2018 concluded that France’s nuclear plants are a safety threat because of their excessive reliance on outsourcing, the risk of terror attacks and a lack of operational rigour.

Unlike the US, Russia and Japan, France has had no major nuclear nuclear accidents such as Three Mile Island, Chernobyl or Fukushima and its regulator ASN is seen as independent.

But EDF’s long series of problems – both at its existing fleet of 58 nuclear reactors and at the EPR reactors under construction in Flamanville and in Olkiluoto, Finland – have tarnished EDF’s image as a leader in nuclear technology and weighed on its ability to sell nuclear plants abroad.

While Russian rival Rosatom here has a $133 billion order book here reactors worldwide, EDF’s only foreign project is for two EPR reactors at Britain’s Hinkley Point, in a contract with its own UK arm, EDF Energy.

“Sometimes there are weak signals, but we are putting in place procedures. Safety is our number one concern, it is in our DNA,” the EDF spokesman said.

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Eversmart Energy collapses to leave 29,000 customers without supplier

A green energy firm with more than 29,000 customers has collapsed, becoming the sixth supplier this year to go bust.

Eversmart Energy confirmed it had ceased to trade in a short note on its website on Friday.

Industry regulator Ofgem said it would appoint a company to take on all of Eversmart’s customers, advising them not to switch to a new provider until this process was completed.

The collapsed firm supplied energy to 29,000 households and “a very small number” of businesses, Ofgem said.

 

Philippa Pickford, the regulator’s director for future retail markets, said: “Eversmart Energy customers do not need to worry, as under our safety net we’ll make sure your energy supplies are secure and domestic customers’ credit balances are protected.

“Ofgem will now choose a new supplier for you and whilst we’re doing this our advice is to ‘sit tight’ and don’t switch. You can rely on your energy supply as normal. We will update you when we have chosen a new supplier, who will then get in touch about your new tariff.”

Eversmart did not say why it had ceased trading, but the Energy Ombudsman said complaints about the Manchester-based firm had soared from 55 last year to 225 in the first eight months of 2019.

Energy Ombudsman chief executive Matthew Vickers said: “We have seen a significant increase in complaints about Eversmart Energy, receiving four times as many complaints so far this year as we did in the whole of last year.

“Billing and switching problems have been the main drivers of unresolved complaints about the company.”

Eversmart was named the second worst supplier for customer service in a report by the Energy Ombudsman last year.

Last year the firm was criticised for launching a low-cost tariff in which households had to pay about £1,000 for a year’s worth of energy up front.

Bosses said at the time claimed the tariff was “better value than an Isa or a high street savings account”, but Citizens Advice warned the rest of the industry would be forced to pick up huge outstanding debts if the supplier went bust.

It is not known if the supplier who picks up Eversmart’s customers will honour the 12 per cent interest they were promised, or how many of the 29,000 customers were on the tariff.

Eversmart is the 13th supplier to drop out of the UK market since the beginning of last year. Its collapse comes three weeks after competitor Solarplicity ceased trading.

Gillian Guy, chief executive of Citizens Advice, said: “Our research shows this unlucky baker’s dozen of failed companies has left behind at least £172 million in unpaid costs. These will be picked up by other consumers through higher bills.

“When a supplier goes bust, customer credit balances are protected. But all of us will eventually pay for honouring them through increased bills.

Ofgem warned last month more providers are to go bust or merge after a huge increase in the number of small firms entering the market in recent years. The regulator announced stricter tests on new suppliers’ financial health earlier this year under proposals designed to stem the rising number of failures.

Emma Bush, energy expert at price comparison service uSwitch, added: “With yet another supplier going out of business, Ofgem needs to press ahead with its reforms for regular health checks on existing energy companies to ensure each and every one can finance its operations while upholding a high level of customer service.

“Regular stress-tests for suppliers and ongoing fit-and-proper person assessments would help that.”

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Small energy companies risk going bust in financial shock

Suppliers must pass renewable subsidies to Ofgem in August

Thousands of homes could lose their energy supplier in the coming months as a result of a financial shock looming over the industry’s smaller companies.

Suppliers are due to pass on millions of pounds’ worth of renewable energy subsidies, collected via energy bills, to the energy regulator, Ofgem, by the end of the month.

This deadline has in the past proved fatal for financially unstable energy suppliers, and it is feared that a string of collapses may follow in the coming months. Suppliers have until 31 August to pay their share of the renewable energy subsidies, or can opt to pay the amount owed – plus interest – by 31 October.

In the past week, Solarplicity has gone bust, leaving 7,500 homes without a supplier. URE Energy was stripped of its supplier licence for failing to pass on its renewable energy funds from last year’s deadline. In total, 14 suppliers have crashed out of the market since the start of last year, and some predict the same number will fail in the years ahead.

A spokeswoman for Ofgem said that given the “huge growth in the number of suppliers” it expects there to be a “period of consolidation” as some exit the market or merge. The energy market has grown rapidly, from 12 suppliers in 2010 to 70 last year, thanks to policies designed to encourage startups into the market as possible.

“Given the large number of suppliers, it’s also more likely that one may collapse – but Ofgem’s safety net will ensure that their customers are already protected,” she added.

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Low-carbon energy makes majority of UK electricity for first time

Rapid rise in renewables combined with nuclear generated 53% in 2018

Low-carbon energy was used to generate more than half of the electricity used in the UK for the first time last year, according to official data.

A rapid rise in renewable energy, combined with low-carbon electricity from nuclear reactors, made up almost 53% of generation in 2018, the government’s annual review of energy statistics revealed.

Renewable energy sources set a new record by meeting a third of the UK’s power generation last year after the UK’s capacity to generate power from the sun, wind, water and waste grew by 10%.

The UK’s use of coal fell by a quarter to a record low of just 5%, according to the report.

The government’s annual “energy bible” confirms a string of record green energy records broken in recent years, as the UK undertakes more renewable energy projects and shuts down old, polluting coal plants.

National Grid said earlier this year that the UK had recorded its greenest ever winter due to windy weather and dwindling coal-fired power.

This followed the second greenest summer, which fell narrowly short of the 2017 record for renewable energy due to a long heatwave. Very hot weather can have a negative impact on renewable energy generation because high pressure weather systems can suppress wind speeds, and solar panels produce less electricity if temperatures climb too high.

The rise of renewables has edged out coal and gas plants which together made up less than 45% of the UK’s electricity last year.

Gas generation fell to 39.5% of the generation mix last year, from 40.4% in 2017. Coal generation continued to decline, falling to 5.1% last year after the Eggborough coal plant shut and Drax converted one of its units to burn biomass instead.

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Only five coal plants will be left running by the end of the coming winter after SSE announced plans to shut its last coal plant at Fiddler’s Ferry near Warrington, Cheshire, in March 2020.

Emma Pinchbeck, the deputy chief executive of Renewable UK, said the record-breaking figures “clearly show that investment in renewables and the government’s championing of offshore wind is delivering rapid change to our energy system”.

“As well as helping keep prices down for consumers and boosting the competitiveness of our businesses, renewables are a huge economic opportunity, bringing employment and investment to all parts of the UK,” she said.

The government threw its weight behind the offshore wind sector earlier this year by promising developers the chance to compete for a share of £557m of state subsidies in exchange for industry investment of £250m over the next 11 years.

The deal could help offshore wind grow to 30% of the UK’s electricity by 2030 as the UK works towards a 2050 target to cut emissions from the economy to net zero.

But ministers have refused to lift a block on support for new onshore wind farms, which are unable to compete for subsidies despite being one of the cheapest forms of electricity.

“To achieve its net zero ambitions, the new government needs to go further and faster – and the first steps should be removing the barriers to onshore wind which is our cheapest source of power, and building on our successes in innovative technologies like tidal energy and floating wind where the UK can be a world leader,” Pinchbeck said.

Source: https://www.theguardian.com/environment/2019/jul/25/low-carbon-energy-makes-majority-of-uk-electricity-for-first-time

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Chernobyl 2.0 fears as nuclear expert warns against re-opening cracked UK reactor

Nuclear experts have warned against re-opening a 43-year-old Scottish nuclear reactor riddled with cracks over fears of a meltdown.

Hunterston B nuclear power plant was shut down last year after it was found that Reactor 3 had almost 400 cracks in it – exceeding the operational limit.

EDF, which own the plant in Ardrossan, Ayrshire, are pushing to return the reactor to service at the end of June and July and want to extend the operational limit of crack allowed from 350 to 700.

However, the plans to reopen the plant have sparked fears it could lead to a nuclear meltdown similar to the 1986 Chernoybl disaster .

Experts have warned that in the very worst case the hot graphite core could become exposed to air and ignite leading to radioactive contamination and evacuation of a large area of Scotland’s central belt – including Glasgow and Edinburgh.

According to Dr Ian Fairlie, an independent consultant on radioactivity in the environment, and Dr David Toke, Reader in Energy Policy at the University of Aberdeen, the two reactors definitely should not be restarted.

Speaking about the cracks in the barrels, they warned: “This is a serious matter because if an untoward incident were to occur – for example an earth tremor, gas excursion, steam surge, sudden outage, or sudden depressurisation, the barrels could become dislodged and/or misaligned.

“These events could in turn lead to large emissions of radioactive gases.

“Further, if hot spots were to occur and if nuclear fuel were to react with the graphite moderator they could lead to explosions inside the reactor core.

“In the very worst case the hot graphite core could become exposed to air and ignite leading to radioactive contamination of large areas of central Scotland, including the metropolitan areas of Glasgow and Edinburgh.”

A planned inspection of the graphite bricks that make up the core of reactor three in March last year uncovered new “keyway root cracks”.

Around 370 hairline fractures were found, which the BBC reports equates to about one in every 10 bricks in the reactor core.

EDF Energy said these have now grown to an average of 2mm wide.

The operational limit was 350 cracks but the inspection found this had been exceeded.

Cracks to the graphite blocks is known to occur but legislation is in place to ensure they do not threaten the structural integrity of the reactor.

EDF is now hoping to prove it is safe to use and would stand up to the most stringent tests and wants the ONR to increase the upper operational limit to 700  cracks.

The reactors have been closed since October 2018, but EDF Energy said yesterday it was confident its Hunterston B nuclear plant would eventually reopen.

Station Director Colin Weir said: “Nuclear safety is our overriding priority and reactor three has been off for the year so that we can do further inspections.

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Renewable energy jobs in UK plunge by a third

The number of jobs in renewable energy in the UK has plunged by nearly a third in recent years, and the amount of new green generating capacity by a similar amount, causing havoc among companies in the sector, a new report has found.

Prospect, the union which covers much of the sector, has found a 30% drop in renewable energy jobs between 2014 and 2017, as government cuts to incentives and support schemes started to bite. It also found investment in renewables in the UK more than halved between 2015 and 2017.

The union compared the situation to the devastation caused to coalmining communities in the 1980s and demanded instead a “just transition” to clean energy.

The Prospect report analysed and collated data taken from various sources, including the government, surveys and industry.

Sue Ferns, the senior deputy secretary general at Prospect, told the Guardian: “The government’s market-led approach has failed, and resulted on offshoring green jobs while UK workers are left behind. Without a proper industrial strategy from government that promotes low-carbon generation like renewables and new nuclear, we will be unable to secure the future of our energy supply, which is under threat in the coming decade.”

The focus on Brexit had not helped, she added. “The government’s tunnel vision on Brexit means the real challenges facing our country have been neglected for too long. We need a sensible deliverable strategy that provides a stable long-term pathway to decarbonisation.”

The drastic fall in jobs came as the government effectively shut down schemes that rewarded consumers for buying solar panels, withdrew subsidies for onshore wind and reduced incentives for low-carbon energy. Ministers have argued that as the costs of renewable energy have fallen sharply in recent years, the industries should no longer rely on public subsidy, but multiple redrawings of government schemes in recent years have helped to create turmoil and a lack of certainty for companies.

Government support has taken the form of various schemes across the last decade, including feed-in tariffs for consumers with solar panels, a renewables obligation forcing the big energy suppliers to invest in renewables, and most recently, contracts for difference. The latter were meant to overhaul the whole energy sector by setting up auctions by which companies would bid for generation contracts favouring low-carbon energy, but early troubles meant dirty energy such as diesel generators were often the inadvertent winners, and while the scheme still operates it has enjoyed little support from successive chancellors.

Between 2016 and 2017, there was a sharp fall in investment in UK renewables, which fell 56% to the lowest level since 2008, according to the as-yet-unpublished Prospect report that has been seen by the Guardian. Last year, the annual rate of addition of renewables capacity fell to its lowest level since 2012, which the union said was driven by the collapse in solar and onshore wind deployment. Without the significant rise in bioenergy capacity that took place in 2018, the fall in new renewables would have been much greater, the union said.

While some sectors have remained buoyant, such as offshore wind, new capacity in onshore wind in England slowed markedly after the government withdrew financial support and changed planning laws to make the construction of windfarms more difficult.

Luke Clark, head of external affairs at the trade body RenewableUK, said: “We’re expecting the number of direct jobs in offshore wind to treble to 27,000 by 2030, as part of the landmark offshore wind sector deal we’ve agreed with government, as this provides long-term certainty for the industry. However, as onshore wind remains excluded from government-backed auctions for contracts to generate power, the UK is missing out on employment and investment opportunities offered by this technology. The auction process has also failed to bring forward new technologies like tidal energy projects, so there is huge potential to ramp up employment in renewables as we move to net zero emissions.”

The trade union said the dismal picture for jobs in much of the sector contrasted with government rhetoric on issues such as moving to a net zerocarbon target and parliament declaring a climate emergency.

Ferns told the Guardian: “Successive governments have promised us a green jobs revolution, but after an initial upsurge we have now started going backwards. This is deeply worrying for the future of the energy sector and for low-carbon jobs in the UK.”

She added: “The Committee on Climate Change has recommended zero carbon by 2050 and others are pushing for even more ambitious timescales. We need a just transition for all the workers affected and this means we need to work proactively to ensure that the damage inflicted on coal communities in the 1980s is not repeated.”

A spokesperson for BEIS told the Guardian: “We’ve seen the number of green collar jobs soar to approximately 400,000, with clean growth at the heart of this government’s modern industrial strategy. This figure could more than quadrupled to 2m by 2030. We’ve injected £2.5bn into low-carbon innovation and [the] deal with the offshore wind industry will see up to £40bn infrastructure investment.”

Green collar jobs are defined by BEIS as those in clean growth, which means activity that increases the national income while reducing emissions. The number of people working in green jobs in the UK was estimated at 1m in 2012, by the UN.

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Britain’s energy bosses back UK bid to host key 2020 climate talks

Bosses at the UK’s leading energy firms are urging the Government to ensure the UK is picked as the venue for key international climate talks in 2020.

Britain is bidding to host the UN climate change conference next year, the biggest since the Paris agreement was signed in 2015

Under UN rules the COP (Conference of the Parties) next year should be hosted by a European nation and take place in the first year the Paris agreement would come into full effect.

The conference will mark a crucial deadline for countries to comply with their commitments in Paris on reducing greenhouse gas emissions and move on to tougher targets for the decade to 2030.

If successful, the move would be a strong signal of the UK government’s determination to retain its role on the world stage after Brexit.

‘Strong record of leadership’

In a letter to ministers and opposition leaders, the bosses of companies including Centrica, ScottishPower, National Grid, Drax, BP and Shell said hosting the UN meeting would give the UK an opportunity to be seen as a green leader.

In addition 162 MPs have signed a letter to Prime Minister Theresa May, saying the country’s “strong record of leadership and ongoing commitment on climate change” makes it the ideal place to hold them.

Energy and Clean Growth Minister Claire Perry revealed last December that she had officially written to express the UK Government’s interest in hosting the talks in 2020.

A decision on where in Europe to hold the “Cop26” talks at the end of next year is expected in June.

‘Maximise the opportunities’

The UN awards the hosting of the COP usually by alternating among developed and developing countries, and different continents, though the rules can be flexible

In the letter from the energy giants – which also include Affinity Water, Anglian Water, Capita, GKN Automotive, Heathrow Airport and Innogy Renewables UK, business bosses back the British bid to host the talks.

“Hosting Cop26 would provide the UK with a platform to further develop and maximise the opportunities of the global shift to clean growth and showcase to the world the best of the UK economy.

“It would be the country’s moment to build further support for an ambitious clean growth trajectory, underscore ambitions for a net-zero economy in line with the Paris Agreement, and set out the opportunity of economic renewal and enhancement through climate action.”

One of the signatories, John Pettigrew, chief executive of National Grid, said hosting the talks would let the UK send a message to the world that “we are proud to take the lead in the fight against climate change”.

“Our progress on clean energy has seen this country make international headlines; for example, when we recently went over a week without any coal generation for the first time since the 19th century. But we all need to do much more.

“This summit represents an opportunity to get the world to unite behind one of the most important challenges we all face and we look forward to working with the Government to bring COP to our shores,” he said.

Lead signatory of the letter from MPs, Labour and Co-operative MP Alex Sobel said: “Having just announced a climate emergency, MPs from across all parties in the UK Parliament are keen to see bold action taken on climate change.

“Cop26 is a key moment when the countries of the world will also be looking to cross divides to come together and build on their climate change pledges.

“With its diplomatic weight and having passed the World’s first Climate Change Act over 10 years ago, the UK is ideally placed to play this role, guiding even those less ambitious countries towards strong commitments.”