Five things we learnt from Energy Spectrum | 656

With an Ofgem review of the microbusiness sector in the offing, the increasingly competitive nature of the business energy market – which is also being radically overhauled by innovation – means that the regulator would be wise to take a wider, overall market view in its review process. This is the conclusion of this week’s Energy Perspective, which analyses in further detail how innovation and competition are decoupling the business electricity and gas markets, finding that regulation will need a much clearer framework as the markets become ever more diverse.

Following its suspension, the success of the Capacity Market (CM) scheme now depends on a swift resolution to the ongoing state aid challenge. In this week’s Policy section, we discuss BEIS’s publishing of its response to an earlier consultation on amendments to the CM which, among other points, outlines draft regulations that will enable a replacement T-1 auction for 2019-20 delivery.

The Data Communications Company’s costs are increasing year-on-year, and substantially above its forecasts – most recently seeing it failing to justify £132.48mn of internal costs it forecast to be incurred over 2018-26. In this week’s Regulation section, we find that Ofgem has seen little effort to budget for efficiency costs as, on 27 February, it announced that the business had failed to factor into its future costs any efficiency improvements or headcount reduction plans.

BP’s recent Energy Outlook 2019 is analysed in our Industry Structure section, where we suggest that the forecast emphasises that there is more to decarbonisation the power sector. Specifically, that a growing and wealthier population will demand more energy and while lower energy intensity will trim that growth, it will not be to the extent that global emissions reductions will be feasible without intervention.

Centrica’s publishing of its preliminary results for 2018 on Thursday 21 February is the subject of this week’s Nutwood, written by Cornwall Insight Associate Peter Atherton. With the results demonstrating that every major business unit fell short, Atherton suggests there are three possible futures open to Centrica.

Related thinking

Home supply and services

Reforming Energy Bills: What’s on the Table?

There has been much speculation in the energy industry over what reforms to household energy bills could potentially be introduced, particularly with Ofgem due to announce its Q3 (July – September) 2024 Default Tariff Cap figures on Friday (24th). With so many areas under review, we’ve put together an overview...

Low carbon generation

Latest developments in the TPI space

We recently published our 2023 Annual TPI report which provides an independent review and analysis of the market for TPIs, and the services provided by them. The report also looks at the current challenges and opportunities for TPIs, such as regulatory changes, competition with suppliers, and diversification of services. 2023...

Regulation and policy

What’s going on with REGOs?

Renewable Energy Guarantees of Origin, more commonly referred to as REGOs, are certificates issued to accredited renewable generators for every MWh of electricity they produce over a year period. The initial intentions of these certificates were to provide suppliers a means to prove the level of renewable generation they received...

Home supply and services

Ofgem strives to improve consumer experiences across both the domestic and non-domestic sectors

Over the last week, a number of anticipated publications were issued by Ofgem that hold the potential to make a significant change to the requirements on both domestic and non-domestic suppliers. The findings of Ofgem’s non-domestic market review were revealed, alongside a policy consultation on the options available to address...

Energy storage and flexibility

Waiting to connect: the problems and solutions for network connection queues (Part 2)

Network connection queues continue to be a notable topic of interest as many generators face significant delays to project development – an issue that is directly conflicting with net zero ambitions and recent focuses on strengthening domestic energy supplies. In Part 1 of our two-part series on connection queues we...

Home supply and services

Addressing consumer harms in the non-domestic market

In recent months, Ofgem has shone a light on areas across both the domestic and non-domestic market where suppliers could improve their practices for customers and go beyond what they are obligated to do in the licence conditions. In a time of significant and extended volatility, the regulator has brought...

Energy storage and flexibility

Waiting to connect: the problems and solutions for network connection queues

The number of grid applications has risen significantly in recent years, resulting in increased pressure on the electricity networks to facilitate new connections. In its Energy Security Strategy, the UK government set out ambitions for 95% of electricity to be sourced from low carbon generation by 2030, and for the...

Energy Market Design

Are prices going to rise in Contracts for Difference Allocation Round 5?

A number of factors may be about to put an end to the trend for falling energy prices in the Contracts For Difference (CfD) scheme. The CfD scheme has provided strong subsidy support whilst also providing consumers robust levels of protection. High investor confidence and steady reductions in capital costs...