Five things we learnt from Energy Spectrum | Issue 653

We present five key themes and findings from this week’s edition of Energy Spectrum issue 653

The commissioning of the 1GW NEMO link interconnector, linking the GB power market to Belgium, on 31 January marks the start of a potential wave of new development that could see total cross-border capacity rise to 20GW by 2030. Despite uncertainty surrounding Brexit, the strong business case for interconnectors, backed by policy support in the shape of cap and floor, means that deployment of the pipeline of new capacity is likely to continue. In this week’s Energy Perspective, we suggest that new links have even greater strategic importance in government thinking following the recent abandonment and suspension of several nuclear projects. We also use our own analysis to demonstrate that any policy decision based on import volumes alone is likely to create risk and that interconnectors should form the basis for bi-directional management of continental intermittency as renewables continue to grow.

A recent report published by the Parliamentary Scottish Affairs Committee calling for an ambitious sector deal to support the nation’s oil and gas industry well demonstrates the tensions that typify the decarbonisation debate. In this week’s Policy section, we consider the detail of the report, which illustrates the opposing views around choices for delivering the Clean Growth Strategy and the Industrial Strategy.

Approved changes by Ofgem to two parameters used to remove balancing actions from the electricity balance price calculation will better reflect National Grid’s costs in balancing the system. However, we find in our Regulation section that they are also set to make imbalance prices on average higher and more volatile, which will send a sharper signal for trading parties to achieve contractual balance.

A report commissioned by the Offshore Wind Industry Council outlining recommendations for the UK to capitalise on opportunities in the offshore wind supply chain is both well-timed and makes a strong argument as to why the current policy commitment to support offshore wind should be the minimum. We analyse the report in more detail in our Industry Structure section.

In Nutwood, Cornwall Insight Modelling Consultant Paul Anderson explains why 2019 – even in its early stages – already appears to be another interesting year for the Triad transmission pricing scheme. Anderson explains that changes to the Triad scheme must be managed carefully in order to not penalise those who have invested in response to the previously Ofgem-endorsed charging methodologies.

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

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