Five things we learnt from Energy Spectrum | Issue 651

We present five key themes and findings from this week’s edition of Energy Spectrum Issue 651

The debate around new nuclear continues to shift at pace, not least as a result of growing confidence in the role that renewable sources, flexibility, demand-side response and interconnectors can play. In this week’s Energy Perspective, we explore how Hitachi’s decision to suspend its UK nuclear development programme earlier this month has brought into sharper focus suggestions that a future with less like-for-like nuclear replacement. We conclude that the debate about decarbonisation is shifting and in a direction that is away from new nuclear build.

Higher load factors for renewables in the next Contracts for Difference (CfD) auction round both reflect increasing efficiencies and a higher expectation for every pound of government subsidy. In this week’s Policy section we consider the detail of the draft framework for CfD allocation round 3. Changes include use of an intermittent and baseload reference price and the introduction of an auction cap.  

Proposed BSUoS changes at transmission level will also need to encompass a solution for embedded storage. This is the conclusion of our consideration of the open letter from Ofgem on how proposed changes to systems and network charges will impact storage. The Regulation section also considers the latest efforts to ensure the GB gas industry is in compliance with the EU Tariffs network code.

Switching hit record levels in 2018. In Industry Structure, we consider how switching levels continue to rise, despite the decrease in cheap tariffs over the year highlighted by recent Cornwall Insight analysis. Compared to the 87 available in December 2017, only 16 tariffs were priced below £1,000/ year in December 2018.

In Nutwood, regulator contributor Perry Sioshansi explores the trend of zero emissions homes. While still a niche market appealing to the environmentally minded and upper end of the new housing market, the movement is taking root as more homebuyers demand it and more architects and builders learn how to build them.

What is the Energy Spectrum service?

The Energy Spectrum service consists of two publications designed to keep you informed of key news from the energy market:

Daily Bulletin –  a concise daily summary of the key news from the last 24 hours in policy, industry and markets, and regulation
Energy Spectrum – our longer weekly publication provides a more detailed look at the events of the previous seven days. Energy Spectrum discusses the headline news and highlights key information within each brief. It also includes a markets page outlining headline trends in gas, electricity, and commodities
Sign up to a free trial

To subscribe or to request a free one-month trial of the service, email or call 01603 604 400.

Related thinking

Regulation and policy

Government Announces Record Budget for Contracts for Difference Allocation Round 6

The government has released the budget and reference prices, along with the auction parameters, for the upcoming Contract for Difference (CfD) Allocation Round 6 (AR6). As recently reported, there were considerable questions outstanding about the parameters which will be used in the auction and significant pressure was placed on AR6...

Net zero corporates and ESG

Help us understand your business decarbonisation challenges

Are you a large business impacted by the challenge of increasing energy costs and decarbonisation targets? If the answer is yes, then we’d love your help to find out more about the challenges you are facing. We recently published an insight paper on the challenging economic climate that businesses are...

E-mobility and low carbon

2022’s most exciting ‘Charts of the Week’

Some of our team have looked back throughout 2022 and picked their most exciting ‘Chart of the Week’.​Their choices include exploring green tariffs, wholesale gas prices, CfD allocation round 4 and the MHHS Implementation Levy.  It’s My Birthday – Two years of Dynamic Containment Picked by Tom Faulkner, Head of...

Energy Market Design

Financing Net Zero: A (revenue) cap on UK merchant financing opportunities?

On 13 October 2022, we hosted the latest instalment of our ‘Financing Net Zero’ webinar series. The session, sponsored by Shoosmiths, focused on opportunities and challenges for merchant financed renewable projects amid the current wholesale price volatility.   In recent years, due to the increasing success-rate and profitability of renewable projects,...

Regulation and policy

Government to consult on the introduction of Cost-Plus-Revenue Limit

The government issued its Energy Prices Bill on 12 October. The bill will put in law a number of the already-announced mechanisms that will be used to support households and businesses this winter including the Energy Price Guarantee and the Energy Bill Relief Scheme. Also announced alongside this is the...

Energy storage and flexibility

From zero to hero: Can CfDs split markets and reduce costs this winter?

Given media comment on the imposition of a revenue cap for low carbon generators instead of migration of existing projects onto a CfD, please find below a blog published by Cornwall Insight three weeks ago. Not only did this note the possibility of the revenue cap being a fall back...

Power and gas networks

Gas DSR reforms ahead of winter 2022-23

National Grid has recently carried out a review of the Gas Demand Side Response (DSR) voluntary curtailment mechanism through July and August. The Gas DSR allows shippers to offer a consumption curtailment service to National Grid Gas (NGG) during periods of acute gas supply constraint called a Gas Deficit Emergency...

Energy Market Design

How does REMA impact energy generation, flexibility and consumers?

The Review of Electricity Market Arrangements (REMA) is the largest review programme of GB electricity market arrangements for a generation. It comes at a time when European energy markets are suffering extreme turmoil. Depending on the outcome there could be significant implications for generators, flexibility providers, and, indirectly, consumers. REMA...