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ELEXON Insights: The electricity industry – ten years of change

The 2010s were a period of significant change for both ELEXON and the wider industry. The shifts seen during the span of ten years were both unprecedented and unpredicted. ELEXON provides a wealth of data to industry via the Balancing Mechanism Reporting Service (BMRS), ELEXON Portal and through data flows. Using some of this data we have created four graphs that reflect on significant changes to generation, demand and balancing between 2010 and 2019.

Changes to how electricity is generated

The first graph shows the rise of low CO2 fuels as a proportion of Great Britain’s fuel mix. In the span of ten years, Great Britain’s fuel mix has gone from 76.3% of generation using fossil fuels to 41.3% from fossil fuels. This has coincided with increases in the proportion of the fuel mix generated from low CO2 fuels, which was 21.6% in 2010 and 49.8% in 2019.

Generation from coal and gas fuelled power stations form the fossil fuel generation type. The low COfuels include generation from: wind, solar, nuclear, hydro, and biomass. Biomass has been classified as a low COfuel despite its emissions as Drax, the largest generator using biomass in Great Britain, has a carbon neutral process. The COabsorbed by the trees planted to produce the wood for the biomass pellets counteract the COproduced in combustion.

The ‘other’ fuel type shown as the pink line on the graph, includes:

  • Generation in Great Britain where we don’t record the fuel type.
  • Generation from outside of Great Britain transferred over interconnectors to meet Great Britain’s electricity demand.

Electricity imports over interconnectors should be considered as part of Great Britain’s fuel mix as it forms the majority of the ‘other’ fuel type. The percentage of Great Britain’s electricity demand met by imports has increased from 2.1% in 2010 to 8.6% in 2019.

Graph number two compares the volume of electricity produced in 2010 to 2019.

The biggest changes in volume of electricity produced relate to coal, which was generating 137 TWh in 2012 at its peak. Coal-fired generation was the second largest producer of electricity in 2010 and 2011, and the largest overall from 2012 to 2014. Since 2015 the decline in coal generation has been rapid and in 2019 it was the sixth greatest generator contributing just 6 TWh.

We are also able to view the significant increase in generation from wind, interconnectors, biomass and solar. These four sources produced 112 TWh of electricity in 2019, compared to 17 TWh in 2010. These fuels have replaced the majority of coal fired generators.

Gas generation still plays a big role as shown in the graph and it is unlikely that our electricity system will ever be run completely without gas power stations. Greater use of carbon capture and storage and alternatives to gas are required in order to achieve Net Zero.

Looking at electricity generation overall, and excluding imports, the total electricity generation per year in Great Britain has decreased from 334TWh in 2010 to 266TWh 2019.

Changes to demand

You can use the day and night filters to see how the annual day time and night time demand has decreased. Annual day time demand has decreased by 38TWh (15.6%) and night time demand has decreased by 16TWh (17.3%).

Demand is calculated as the sum of metered volume from Balancing Mechanism Units where there is net demand. A Balancing Mechanism Unit represents a group of customers’ metering systems used by ELEXON in Settlement.

Small scale generation embedded in a Balancing Mechanism Unit that has overall net demand has some of its demand netted out by solar generation. Embedded generation from wind and solar has increased from 6.4TWh in 2010 to 23.5TWh and is responsible for 31.7% of the total decrease in electricity demand.

As solar can only generate during the day we can also conclude that the 11.6TWh increase in embedded solar generation is responsible for 30.5% of the 38TWh decrease in day time demand.

It is difficult to attribute the rest of the decrease in day and night time demand to a particular source. Part of the decrease in day time demand will be due to a decrease in large scale manufacturing taking place in Great Britain with many companies moving factories overseas to avoid increasing costs. Both day and night time demand will have decreased due to an increase in uptake of energy efficient technology and appliances.

Nonetheless, if the decrease in demand for electricity continues in the next ten years, achieving Net Zero may become easier.

Rising costs for managing the system

The final graph shows the increase in the costs to manage the system through the Balancing Mechanism. ELEXON calculates the cashflows for the Balancing Mechanism as part of electricity Settlement. The annual cost to National Grid ESO of managing the system has increased threefold from £215 million per year in 2010 to £672 million in 2019.

National Grid ESO use the Balancing Mechanism to pay for flexible generation and demand side response providers to increase or decrease their generation or demand. This helps the ESO to manage supply and demand on the electricity system and relieve constraints (for example, when there isn’t enough network capacity to transport electricity that is being produced).

This graph can be filtered to show the annual Balancing Mechanism cashflow during the day and overnight. The cost of managing the system during the day has increased from £171 million in 2010 to £386 million in 2019, while the overnight cost has increased from £43 million in 2010 to £286 million in 2019.

In 2010 the ratio of overnight costs to day was 20:80, in 2019 that ratio was 43:57. The increase in the cost of balancing the system overnight has meant that it has become nearly as expensive to balance the system overnight as during the day.

The costs for balancing the electricity system have increased, partly due to the natural unpredictability of when renewable generators will be available. When there is plenty of wind or sun there is an abundance of generation on the system, which is cheaper to produce than electricity from fossil fuels.

If this occurs when demand is low, the ESO may need to pay renewable generators to reduce their output. This can happen in the day time and at night, where a large surplus of wind generation output may be available when demand has tailed off. During December 2019, generation at night was so high at some points that there was a negative Imbalance Price for a record 13 hours, you can read more in our sub-zero electricity prices in December article.

At times of peak demand, renewable sources may not be available to generate and therefore fossil fuel generation has to be increased. As an industry we need to encourage development of electricity storage which can absorb excess renewable generation and export it back to the networks when it is needed.

Conclusions

The 2010s have been filled with rapid change for the electricity system and data such as this provides important insights which both ELEXON and the industry can apply, as we work together to help deliver on the commitment to ‘Net Zero’ carbon emissions

It is difficult to predict exactly how the electricity system will develop. So together with the industry we work to anticipate changes to rules and process that will be needed to support a smarter, greener system and deliver reforms.

This includes our work on the Target Operating Model for moving to Market-wide Half Hourly Settlement which would allow consumers to take up a wider range of ‘time of use’ tariffs. We are also proposing that nationwide electricity ‘flexibility platforms’ are set up so offers of demand-side response, output from electricity storage facilities, and spare network capacity can be traded easily.

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Who pays for the EU’s €1tn green deal?

Under its president, Ursula von der Leyen, the European commission has big plans to address climate change. With a €1tn ($1.1tn) investment package, it hopes to transform Europe into a carbon-neutral economy by 2050.

But much of that €1tn for the commission’s proposed green deal would be generated through financial-leverage effects. In 2020, the EU will formally allocate for such purposes only around €40bn, most of which is already included in the budget from previous years; arguably, only €7.5bn of additional funding under the plan would actually be new.

As with the previous commission’s 2015 Juncker plan, the trick, once again, will be to muster the lion’s share of the quoted sum through a shadow budget administered by the European Investment Bank (EIB). The commission, after all, is not allowed to incur debt; but the EU’s intergovernmental rescue and investment funds are.

Jeffrey Frankel Read more

In essence, the EU is doing what the major banks did before the 2008 financial crisis, when they circumvented regulation by shifting part of their business to off-balance-sheet conduits and special-purpose vehicles. In the case of the EU, the guarantees offered by the commission and individual EU member states are sufficient for a high credit rating, and thus for the issuance of European debenture bonds. The funds generated will be used for public and private purposes, and sometimes even for public-private partnerships. But should the guarantees be called in one day, eurozone taxpayers will be the ones to foot the bill.Advertisement

These planned shadow budgets are problematic, not only because they would allow the commission to circumvent a prohibition against borrowing, but also because they implicate the European Central Bank. To be sure, the ECB president, Christine Lagarde, has already announced that she wants the bank to play a more active role in climate-friendly activities within the eurozone. And the ECB is now considering whether to pursue targeted purchases of bonds issued by institutions that have received the commission’s climate seal of approval.

In practice, of course, this most likely means that the ECB would buy up the “green” bonds now being devised by the EIB. Those purchases will then reduce the interest rates at which the EIB can take on debt, ultimately leading to activation of the printing press to provide the money for spending on climate policy.

It is laudable to want to do something about climate change. But under the current plan, the ECB would be pushed into a legal grey area. The institution is not democratically controlled, but rather managed by technocrats on the executive board. Every member state, big or small, appoints its own representative, who then has equal voting rights, personal immunity, and the autonomy to operate free from any parliamentary accountability.

Moreover, under the Maastricht treaty, the ECB board is primarily obligated to maintain price stability, and may support separate economic-policy measures only if doing so does not endanger its ability to fulfil this mandate. In the case of the green deal, the dangers are obvious. If the additional demand created by an expansion of green projects is funded by printing money instead of collecting taxes, it will not withdraw demand from other sectors of the European economy and would therefore be potentially inflationary.

Situations like this serve as a reminder of why article 123 of the treaty on the functioning of the European Union strictly prohibits the ECB from taking part in the financing “of Union institutions, bodies, offices or agencies, central governments, regional, local, or other public authorities, other bodies governed by public law, or public undertakings of member states”. But, of course, the ECB has already circumvented this rule by purchasing around €2tn in public debt from the market, thereby stretching the limits of its mandate to a legally dubious degree.

The latest plans to circumvent the Maastricht treaty will not improve matters. Before the financial crisis, the ECB was concerned only with monetary policy. During the crisis, it turned into a public bailout authority rescuing near-bankrupt banks and governments. Now, it is becoming an economic government that can print its budget as it sees fit.

The impending violation of the spirit of the Maastricht treaty will be twofold: the EU will be assuming debt covertly, and it will be doing so through the printing press. As such, the commission’s plans will further undermine the credibility of the very institution on which Europe relies for its financial and macroeconomic stability and its long-term growth prospects – and this at a time when the world is becoming even more uncertain, competitive and aggressive.

… and never more dangerous than now, as the crisis escalates across the world. The Guardian’s accurate, authoritative journalism has never been more critical – and we will not stay quiet. This is our pledge: we will continue to give global heating, wildlife extinction and pollution the urgent attention and prominence they demand. We recognise the climate emergency as the defining issue of our lifetimes. This month we made an important decision – to renounce fossil fuel advertising, becoming the first major global news organisation to institute an outright ban on taking money from companies that extract fossil fuels.

You’ve read 30 articles in the last four months. We chose a different approach: to keep Guardian journalism open for all. We don’t have a paywall because we believe everyone deserves access to factual information, regardless of where they live or what they can afford to pay.

Our editorial independence means we are free to investigate and challenge inaction by those in power. We will inform our readers about threats to the environment based on scientific facts, not driven by commercial or political interests. And we have made several important changes to our style guide to ensure the language we use accurately reflects the environmental emergency.

The Guardian believes that the problems we face on the climate crisis are systemic and that fundamental societal change is needed. We will keep reporting on the efforts of individuals and communities around the world who are fearlessly taking a stand for future generations and the preservation of human life on earth. We want their stories to inspire hope. We will also report back on our own progress as an organisation, as we take important steps to address our impact on the environment.

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Expert team to advise Citizens’ Assembly on climate change

Three groups of experts have been appointed to advise the soon-to-be-established Citizens Assembly on climate change, an initiative that has been jointly commissioned by cross-party MPs on six parliamentary committees.

The new body will be advised by an academic panel, an advisory panel and a group of four “expert leads”, headed by Chris Stark, chief executive of the Committee on Climate Change.

Letters are being sent to 30,000 households across the UK inviting people to put themselves forward, and a group of 110 citizens that accurately represent the UK population will then be selected.

The assembly will meet on 24 to 26 January in Birmingham, and at three further sittings, with the outcome of their discussions reported back to Parliament

The assembly will consider how net zero can be achieved by 2050 and make recommendations on what the government, businesses, the public and wider UK society should do to reduce carbon emissions.

The “expert leads” are responsible for ensuring that the information provided to Climate Assembly UK is balanced, accurate and comprehensive, and that discussions are focused on the key decisions facing the UK about net zero.

The four members of the group are:

Chris Stark, chief executive of the Committee of Climate Change;

Jim Watson, professor of Energy Policy and Research Director at the UCL Institute of Sustainable Resources;

Lorraine Whitmarsh, professor of Environmental Psychology, University of Cardiff, and director of the UK Centre for Climate Change and Social Transformations

Rebecca Willis, professor in Practice, Lancaster University

The advisory panel supports the expert leads in ensuring the accuracy of the information provided to Climate Assembly UK, and provides feedback on key aspects of the assembly’s design, such as who is invited to speak, what they are asked to cover, and the scope of the debate.

The advisory panel has already met on two occasions. Its members are:

Fernanda Balata, New Economics Foundation

Tanisha Beebee, Confederation of British Industry (CBI)

Patrick Begg, National Trust

Allen Creedy, Federation of Small Businesses (FSB)

Audrey Gallacher, Energy UK

Professor Michael Grubb, University College London (UCL) Institute for Sustainable Resources

Eamonn Ives, Centre for Policy Studies

Ann Jones, National Federation of Women’s Institutes

Ceris Jones, National Farmers Union (NFU)

Chaitanya Kumar, Green Alliance

Kirsten Leggatt, 2050 Climate Group

Matthew Lesh, Adam Smith Institute

Nick Molho, Aldersgate Group

Luke Murphy, Institute for Public Policy Research (IPPR)

Tim Page, Trades Union Congress (TUC)

Doug Parr, Greenpeace

Dr Alan Renwick, Constitution Unit, University College London (UCL)

Dhara Vyas, Citizens’ Advice

Rebecca Williams, RenewableUK

The academic panel will reviews the written briefings created for assembly members . Panel members were chosen on the basis of their expertise on areas of climate change that Parliament and the “expert leads” felt Climate Assembly UK should examine.

Its members are:

Professor Jillian Anable, professor of Transport and Energy, University of Leeds

Professor John Barrett, professor of Energy and Climate Policy, University of Leeds

Professor John Barry, professor of Green Political Economy, Queen’s University Belfast

Professor Jason Chilvers, professor of Environment and Society, University of East Anglia

Professor Nick Eyre, professor of Energy and Climate Policy, University of Oxford

Dr Clair Gough, senior Research Fellow with the Tyndall Centre for Climate Change Research, University of Manchester

Dr Rosie Green, assistant Professor in Nutrition and Sustainability, London School of Hygiene and Tropical Medicine

Dr Jo House, reader in Environmental Science and Policy, University of Bristol

Professor Tahseen Jafry, professor of Climate and Social Justice and Director The Centre for Climate Justice, Glasgow Caledonian University

Professor Carly McLachlan, professor of Climate and Energy Policy, University of Manchester

Professor Dale Southerton, professor in Sociology of Consumption and Organisation, University of Bristol

Professor Benjamin Sovacool, professor of Energy Policy at the Science Policy Research Unit (SPRU) at the University of Sussex 

Rachel Reeves, chair of the Business, Energy and Industrial Strategy (BEIS) Committee, one of six select committees who commissioned the climate assembly, told the BBC that a clear roadmap was needed to achieve the net zero goal.

“Finding solutions which are equitable and have public support will be crucial. Parliament needs to work with the people and with government to address the challenge of climate change.”

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EU to pull plug on wasteful, unrepairable products

Newly adopted EU laws will make several products easier to repair and more energy efficient, saving people money while reducing pollution, NGOs in the Coolproducts campaign said.

For the first time, manufacturers will be obliged to make several home appliances easier to repair following the formal adoption of new laws by the European Commission today. The new rules will also cut the energy needed to power them.

As of 2021, all TVs, monitors, fridges, freezers, washing machines, washer-dryers, dishwashers and lighting products placed on the EU market will have to meet minimum repairability requirements aimed at extending their lifetime.

These products will also be made easier to recycle thanks to improved design and, in the case of displays, the removal of halogenated flame retardants.

The Coolproducts campaign brings together policy experts to ensure product policy benefits people and the planet. It’s led by the European Environmental Bureau (EEB) and ECOS.

Today’s announcement represents a turning point in the way we produce and use our products, according to NGOs.

Stephane Arditi, policy manager for the circular economy with the EEB, said: “This is the kind of innovation that we all need right now.

“Energy efficiency laws have already cut our energy bills and will continue to do so. Now, by also ensuring we get to use our products for longer, Europe can deliver further savings for people while cutting carbon emissions and waste.”

Chloé Fayole, Programme and Strategy Director at ECOS, said: “With these measures, Europe has just taken a big step towards a more circular economy, which should inspire the rest of the world.

“We now expect EU decision makers to replicate this approach to many other products and notably electronic products such as smartphones and computers, to minimise their environmental impact.”

The new measures are part of the EU’s Ecodesign Directive, which removes the most wasteful products from the market, replacing them with units that do the same job with less energy and resources.

They were previously agreed by all 28 EU governments in January, and are among the last few measures adopted by this European Commission before new officials take office.

Together with new energy labels adopted in March, the new energy efficiency requirements will help the EU save an additional 140TWh of energy a year, which corresponds to 5% of the EU electricity consumption. For consumers and companies, this means €20 billion saved on energy bills.

The repairability requirements can help deliver even more savings by slashing demand for new products and carbon emissions linked to manufacturing, distributing, using and disposing of new products.

Extending the lifespan of washing machines by just five years would save the EU as much emissions (CO2eq) as taking half a million cars off the roads annually, a recent study found.

Towards people’s Right to Repair

The new requirements have the potential to make our products last longer. Manufacturers will have to ensure that appliances can be easily disassembled with commonly available tools.

Spare parts and repair information will have to be made available to professional repairers for a minimum number of years.

The next EU officials should ensure that this approach is replicated across most product groups, the NGOs said.

Ugo Vallauri, policy lead of the Restart Project and a member of the newly formed Right to Repaircampaign in Europe, said: “This is an important step in the right direction, but we have a lot of work ahead of us.

“Next step will be to make spare parts and repair manuals available to all, not just professional repairers, and to extend repair provisions to many more products, starting with smartphones.”

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Ofgem has published its state of the market report 2019

The UK continues to be a global leader in cutting greenhouse gas emissions, according to Ofgem’s annual State of the Market report, but progress is slowing. (1)

Greenhouse gas emissions have fallen by 42% since 1990, more than any other large advanced economy, due largely to the decarbonisation of electricity generation. This has been driven by Government policies, such as the carbon price which penalises coal plants in particular, and the huge growth in wind and solar power. In fact, renewables generated a record 33% of our electricity last year. (2)

Progress is slowing however, with last year seeing the smallest reduction in emissions since 2012 (2.5% this year, down from a 3% fall the previous year).

Transport continued to be the largest single source of carbon emissions, although emissions fell slightly last year (3%), partly down to an increase in the number of alternative fuel vehicles, which now account for 2% of the licenced cars on the road in GB. (3)

In June, the Government passed legislation requiring the UK to reduce carbon emissions to net zero by 2050 following calls from the Committee on Climate Change (CCC). To meet this target, significant investment is required, particularly in renewables, as well as policies aiding the roll-out of new low carbon technologies and supporting innovation to decarbonise how we heat our homes and businesses. (4)

A priority of Ofgem’s new corporate strategy is helping decarbonise the economy at the lowest cost to consumers. Ofgem will set out more details on this early next year. (5)

Separately, competition in Great Britain’s retail energy market continued to develop in 2018-19. Medium suppliers benefitted the most from record switching rates (just over 20% in June 2019, up from 19% the previous year), which swelled their market share by 7 percentage points in electricity and 5 percentage points in gas to over 20% of consumers overall. (6)

They also gained customers who were transferred to them under Ofgem’s safety net after a number of smaller suppliers failed and exited the market.

At the same time, the market dominance of the six larger suppliers continued to weaken as they lost 1.3 million customers and saw market share fall to around 70% of consumers, compared to around 75% the year before. Small suppliers for the first time saw their market share fall to 9% of consumers, down from 10% the year before. (7)

During this period, when shopping around for new deals, more consumers turned to price comparison websites (49%), ‘auto-scanning’ notifications (8%) and auto-switching (2%).

Meanwhile, the number of consumers who said they’d never switched fell to 29% – down from 34% in 2018. (8)

In January Ofgem implemented a cap on the price of default tariffs to protect consumers from overpaying for their energy. (9)

The majority of customers on these deals are with the six larger suppliers who charged at the upper limit of the cap. In contrast, medium and small suppliers priced at £43 and £78 below the cap (January – June 2019). (10)

Price transparency has improved in general for business customers. However microbusinesses still lose out and pay on average twice as much for gas and 30% more for electricity than the average across all business customer segments, often because they are on expensive default tariffs.

Energy prices have a direct impact on the welfare of consumers, leading to rationing and even self-disconnection of energy by customers who cannot afford to pay their bills. Ofgem is publishing its updated Consumer Vulnerability Strategy this Autumn. (11)

Joe Perkins, chief economist at Ofgem, said:

“Ofgem’s latest state of the market report shows the progress made so far to decarbonise the economy but much more needs to be done.

“We want the UK to remain a global leader in bringing down greenhouse gas emissions, and our major objective is to help the country rise to the challenge of cutting emissions to net zero by 2050 at the lowest possible price to consumers.

“As well as protecting consumers in the future, our duty is also to protect those today.

“We will continue to enable competition and innovation which benefits consumers, whilst protecting those who need it, as we help build an energy market which works for all consumers.”

Notes to editors

(1)    Ofgem’s State of the Energy Market 2019 report has been published 03-10-19.

(2)    Falling carbon intensity can be attributed, in part, to the new record contribution of renewables, which accounted for 33% of all generation in 2018 – up from 29% in 2017.This was primarily driven by wind, solar and bioenergy. A reduced reliance on coal also contributed to the decline, with its share falling from 7% in 2017 to 5% in 2018 (there was little change in the shares of oil and gas). The Government remains committed to ending unabated coal generation in GB by 2025. Without key decarbonisation policies, such as Renewable Obligations Certificates and Carbon Price support, we estimate that between 2010-18 the UK would have emitted an additional 69 million tonnes of carbon each year.

(3) Transport emissions have fallen by 2% from 2010 levels. BEIS (2019)Final UK greenhouse gas emissions national statistics: 1990-2017; BEIS (2019) Provisional UK greenhouse gas emissions national statistics 2018. The number of licensed electric cars in GB increased from 84,000 in 2010 to 592,000 in 2018, DfT Vehicle Licensing Statistics.

(4)  The Committee on Climate Change has called for a UK target of net zero greenhouse gases by 2050. It advises that the decarbonisation of heat and electrification of transport need to be expedited to match the progress that has been made in the electricity sector. Ofgem’s work and recommendations towards decarbonisation includes supporting the roll out of electric vehicles through flexible charging reforms; supporting further innovation in heat decarbonisation through our RIIO2 network price controls; developing enabling technologies and platforms for a more flexible electricity generation system, including developing cross-industry principles to set common standards and methods to promote interoperability, and reduce barriers to entry and lower costs. Ofgem’s Future Insights Paper 6 – Flexibility Platforms in electricity markets

(5) https://www.ofgem.gov.uk/publications-and-updates/ofgem-sets-out-medium-term-objectives-and-priorities

(6) The majority of switches continues to be away from the six large suppliers to smaller and medium suppliers, including 40% of total electricity switching between July 2018 and June 2019, stable compared with the preceding year. Most of these customers (25% up from 16% the previous year) moved to medium (especially to Bulb and Octopus), rather than small suppliers (16% down from 24% the previous year), which reversed the pattern observed in previous periods . Around 36% of switches, down from 41%, still happened to and within the six large suppliers, even though they generally offered higher prices compared to other suppliers. Ofgem/ Exoserve data.

The speed and reliability of switching has remained the same over the past few years and needs substantial improvement, largely due to data issues, preventing and deterring some customers from switching. Ofgem’s launched its Faster and More Reliable switching programme this year to improve the switching process.

(7) Since June 2018, the six large suppliers had a net loss as a group of around 1.3 million customers and their combined market share fell by around five percentage points in both gas and electricity, broadly in line with the drop observed in the previous two years. Medium suppliers gained around 1.9 million customers[1], and their combined market share reached above 20%, up by nearly seven percentage points in electricity and five in gas by June 2019, compared to only around two percentage points in the previous two years. Small suppliers’ joint market share declined by around one percentage point to 9% in electricity and remained almost unchanged in gas at 9% between June 2018 and June 2019.

(8) In 2019 Ofgem began measuring use of switching and deal scanning services that consumers can register for online.

(9) Ofgem’s Conditions for Effective Competition, published today, sets out the conditions under which Ofgem would consider lifting the default and prepayment tariff price caps. Effective competition is defined as dynamic and vigorous rivalry between firms to win and retain customers, with no significant barriers to consumers making an informed choice, and which generate good outcomes for most consumers so that they get a fair deal in terms of what matters to them.

(10) Less engaged consumers tend to be on more expensive default tariffs, which have been subject to the default tariff cap since 1 January 2019. The proportion of customer accounts on these tariffs has declined over time from 69% in 2015 to 53% in April 2018. As of April 2019, 53% of electricity customer accounts and 51% of gas accounts, excluding customers on prepayment, were still on these tariffs. Around half of these had been on default tariffs for more than three years, and 87% (gas and electric meter points) on default tariffs were with the six largest suppliers.  (11) For more on suppliers’ performance towards their vulnerable customers see Ofgem’s Vulnerable Consumers in the Energy Market report 2019

Further Information

For media queries contact

Ruth Somerville

0207 901 7460

Ruth.somerville@ofgem.gov.uk

Source:

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UK to take a big ‘STEP’ to fusion electricity

Secretary of State for Business, Energy and Industrial Strategy, Rt Hon Andrea Leadsom MP, announced the funding package during a visit to the UK Atomic Energy Authority’s Culham Science Centre HQ in Oxfordshire – the UK’s world-leading fusion research laboratory.

Fusion offers a virtually limitless source of cleaner electricity by copying the processes that power the Sun – the collision of hydrogen atoms to release large amounts of energy. Researchers around the globe are now developing fusion reactors that can turn this into a commercial technology to help satisfy the world’s ever-increasing demand for energy.

STEP will be an innovative plan for a commercially-viable fusion power station – offering the realistic prospect of constructing a powerplant by 2040. The investment will allow engineers and scientists to produce a conceptual design for the reactor (known as a ‘tokamak’) that will generate fusion energy and convert it into electricity. UKAEA and partners from industry and academia will pool their expertise to complete the design by 2024.

The STEP programme will create 300 jobs directly, with even more in the UK fusion supply chain. In addition, the spin-outs from the design work are expected to be enormous – both in terms of synergies with other fusion powerplant design activities (such as Europe’s ‘DEMO’ prototype power station) and other hi-tech industries.

STEP builds on UKAEA’s expertise in developing so-called ‘spherical tokamaks’ – compact and efficient fusion devices that could offer an economical route to commercial fusion power. The new MAST Upgrade spherical tokamak experiment is due to start operations at Culham early in 2020. Its work will play a key role in the STEP design.

Andrea Leadsom, Secretary of State for Business, Energy and Industrial Strategy, said: “This is a bold and ambitious investment in the energy technology of the future. Nuclear fusion has the potential to be an unlimited clean, safe and carbon-free energy source and we want the first commercially viable machine to be in the U.K.

“This long-term investment will build on the UK’s scientific leadership, driving advancements in materials science, plasma physics and robotics to support new hi-tech jobs and exports.”

Professor Ian Chapman, CEO of the UK Atomic Energy Authority, added: “The UK has a proud heritage of pioneering developments in fusion research. This announcement demonstrates the UK government’s commitment to translating that R&D leadership into a working fusion reactor. We are excited to work with our partners to take the next step towards a fusion-powered future.”

If your company or research organisation is interested in taking part in STEP, more information about the project is here: https://www.gov.uk/government/news/next-step-in-fusion

The STEP Procurement Plan Schedule is available here: https://www.gov.uk/government/publications/step-procurment-opportunities

Contact: For more information please contact Nick Holloway, UKAEA Media Manager, on 01235 466232 or nick.holloway@ukaea.uk.

DCPs 332 and 333 – appropriate treatment and allocation of SoLR-related costs

We have approved DCUSA Change Proposals 332 and 333. The two proposals formalise the Supplier of Last Resort cost recovery process into the distribution charging methodologies, covering Last Resort Supply Payment and eligible use of system bad debt.

The Authority approved these modifications on 1 October 2019.

 

Rachel Reeves comments on Government response

Rachel Reeves MP, Chair of the Business, Energy and Industrial Strategy (BEIS) Committee has commented today on the publication of the Government’s response to the Committee report on Carbon Capture Usage and Storage and on the new administration’s overall approach to achieving net zero carbon emissions by 2050.

Given the Government’s ‘disappointing’ response on Carbon Capture Usage and Storage (CCUS), which ‘appears to row back from statements made by former Ministers’, the Chair has also written to the Minister Kwasi Kwarteng with a series of questions seeking to establish the Government’s policy direction on CCUS.

Chair’s comments

Rachel Reeves MP, Chair of the Business, Energy and Industrial Strategy (BEIS) Committee said:

“The Secretary of State is happy to reiterate the Government’s commitment to net-zero by 2050 but fails to give any sense that her Government is dedicated to the urgent actions necessary to achieve it.

“It’s easy to set a target. The harder challenge is putting in place the measures needed to get to net-zero by 2050. Unfortunately, the Secretary of State’s letter gives little confidence that the Government has a clear idea of the policies it wants to pursue to make UK net-zero carbon emissions a reality. Given the UK is hosting COP26 next year, it’s important that we provide international leadership by getting our act together at home on climate change policy.

“It’s encouraging that the Treasury’s review will look at the benefits, as well as the costs, of net zero. Ending the UK’s contribution to climate change has the potential for major health and environmental benefits. It is also crucial the Treasury examines where costs will fall, how the transition can be funded, and how to manage the impacts on bill-payers, motorists and carbon-intensive industries.”

“The Minister’s response to our Carbon Capture Usage and Storage report is very disappointing and sits in contrast to the initial enthusiasm to our findings displayed by the previous Minister, Claire Perry. The Government’s response barely engages with the specific recommendations of our report and it is worrying that the Government now appears to be rowing back on previous commitments. This must be concerning for industry and investors and I hope the Government will rethink its approach and come forward with a clearer indication of what it is doing to ensure CCUS technology is able to deliver on its potential.”

In July, Rachel Reeves MP, Chair of the Business, Energy and Industrial Strategy (BEIS) Committee wrote to Rt Hon Andrea Leadsom, the then new Secretary of State for DBEIS, to press for action on a series of policy fronts such as electric vehicles, carbon capture usage and storage, and energy efficiency, to ramp up UK efforts to meet future carbon budgets and the net-zero 2050 target.

In April, the BEIS Committee published its report, Carbon capture usage and storage: third time lucky? The report urged the Government to give a clear policy direction to ensure the UK was able to seize the industrial and decarbonisation benefits of carbon capture usage and storage (CCUS). The report noted that although the UK has one of the most favourable environments globally for CCUS the technology had suffered 15 years of turbulent policy support, including the cancellation of two major competitions at a late stage. No commercial-scale plant for CCUS has yet been constructed in the UK.

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SSE to cut energy prices by 6% from October 1, in line with UK price cap

LONDON (Reuters) – Britain’s SSE (SSE.L) will cut energy bills for customers on its standard tariff from Oct. 1, with prices falling 6% in line with regulator Ofgem’s price cap, the company said on Wednesday.

The cap on default electricity and gas bills – a flagship policy of former British Prime Minister Theresa May to end what she called “rip-off” prices – came into force in January.

In August Ofgem said the cap would be lowered by 6% from Oct. 1 to 1,179 pounds per year for average energy use to reflect lower wholesale energy prices.

 

SSE said an average user on its standard tariff would pay 6% less, or 1,178.58 pounds a year, and those on pre-pay meters would pay an average of 1,216.90 pounds a year.

However, a small number of customers who use very little energy could see an increase in prices, SSE said, due to a change in the way the standard charge rates – the fees paid by all customers for access to the energy system – are calculated.

“All customers who are negatively impacted by the change will receive a letter/email to explain how the Ofgem cap works and why we’re changing our prices,” SSE said.

Britain’s Competition and Markets Authority said earlier this year that the way standard charges are calculated should better reflect costs for suppliers.

Britain’s other five big six energy providers – E.ON (EONGn.DE), Centrica’s (CNA.L) British Gas, Iberdrola’s (IBE.MC) Scottish Power, Innogy’s (IGY.DE) npower and EDF’s (EDF.PA) EDF Energy – are all expected to make similar price cut announcements ahead of the Oct. 1 deadline.

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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.

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