The government’s decision last week to legislate for a net zero carbon emissions target by 2050 is an epoch defining development for the energy sector. However, as we discuss in this week’s Energy Perspective, there is now greater expectation on the content of the upcoming White Paper to see if policy measures up to the new goal. We consider how the paper may unleash the power sector to achieve the target, concluding that a coherent vision, building coordinated action and dealing openly with the realities of uncertainty should be the starting points.
We discuss in our Policy section the news that the T-1 Capacity Market auction for delivery over the 2019-20 winter concluded at a clearing price of £0.77/kW, which is the lowest ever clearing price for a GB Capacity Auction. We will outline our thoughts on the drivers behind this in more detail in a future issue, but we suggest that the much-delayed running of this auction due to the State aid uncertainties has not helped.
The Policy section also includes the BEIS confirmation of the Smart Export Guarantee launching, which restores a framework for small generators to be paid for their power exports after the closing of the FiT regime for new capacity. However, by swapping a certain price and duration of support for market-driven values, the new framework is much less stable and, in our opinion, less likely to call forward new capacity.
We also look more closely at the issuing by the Energy Data Taskforce of its A Strategy for a Modern Digitalised Energy report. The proposals set out in the document represent a huge cultural shift for the sector when it comes to opening up system data as opposed to personal data, which is covered by GDPR.
The Elexon-led Design Working Group set out that a phased approach is the best way to transition to market-wide half-hourly settlement (HHS) on 7 June, describing how the industry can move towards the DWG’s preferred Target Operating Model (TOM), currently being considered by Ofgem. We discuss the plans in more detail in our Regulation section, stating our belief that it is one of the most important documents to come out of the HHS project, as it explains how the TOM will be put into practice. The fact that HHS depends on other workstreams, however, means it is still some way off.