As the year draws to a close, we’ve seen a number of energy announcements made by the UK Government, from new measures to reduce grid connection delays to an extension to the Climate Change Agreements, which reduces bills for energy-intensive industries. We’ve also been closely following developments at the 28th annual climate change summit – COP28 – which recently took place in Dubai.

Here’s what you need to know this month:

COP28 – the annual Conference of the Parties global climate summit – has come to a close. Following a tense fortnight of negotiations, nearly 200 nations have agreed to transition away from fossil fuels¹. The Global Stocktake, which was agreed to as part of the Paris Agreement, documents the progress of countries cutting emissions and adapting to climate change, and is scheduled to be released every five years going forward. The newly agreed text, which is the first time fossil fuels have been officially acknowledged and agreed to be transitioned away from, will act as a guide for countries as they update their own commitments towards limiting the effects of climate change.

The official text calls for nations to contribute to the transition “away from fossil fuels in energy systems, in a just, orderly and equitable manner, accelerating action in this critical decade, so as to achieve net zero by 2050 in keeping with the science”². Part of this agreement was a call for countries to triple renewable energy capacity globally and double the annual rate of energy efficiency improvements by 2030.

While considered a breakthrough and a victory for the “High Ambition Coalition of Nations”, some have expressed concerns regarding the agreement’s sole focus on “energy systems”, emphasising this as a potential loophole that could be exploited by fossil fuel developers³. Critiques also highlight the agreement’s shortcomings in delivering adequate finance to facilitate decarbonisation and adaptation in developing countries.

Before the start of COP28, the Global Stocktake found that national climate action plans that were agreed to as part of the Paris Agreement remained insufficient to limit global temperature rise to 1.5°C⁴. However, it’s hoped that the outcomes from the last few days will represent a positive step towards more urgent action and a commitment to move away from fossil fuels.

Here are some of the key outcomes from COP28:

• Countries have agreed to contribute to the phasing out of inefficient fossil fuel subsidies and to take more action to address non-CO₂ emissions, including methane.
• An agreement to accelerate the investment in transitional technologies, such as low-carbon hydrogen.
• The tripling of renewable energy will see global installed capacity reach 11,000GW by 2030 and the doubling of the global average annual rate of energy efficiency will reach 4% every year until 2030.
• UK announcements included an £11 billion investment into Dogger Bank wind farm (planned to be the largest offshore wind farm in the world) and a £1.6 billion commitment to international climate finance projects⁵.
• A “loss and damage” fund has been established to support developing countries facing the worst impacts of climate change⁶. Currently over $700m has been pledged to the fund.
• Over 60 nations have signed a new voluntary “Global Cooling Pledge”, which aims to enhance the efficiency of cooling appliances and increasing access to sustainable cooling.

You can learn more about COP28 from its official website.

The Department for Energy Security and Net Zero (DESNZ) and Ofgem have unveiled their Grid Connections Action Plan, which includes plans to significantly reduce connection delays⁷.

As part of this plan, Ofgem have given National Grid’s Electricity System Operator (ESO) new powers to remove speculative projects lacking land rights or planning consent, unclogging the congested Transmission Entry Capacity (TEC) register.

They aim to speed up connection times for more viable renewable energy projects, which will help the UK to achieve its targets of installing 50GW of offshore wind capacity by 2030 and 70GW from solar by 2035.

The challenge of prolonged grid connection delays – some extending beyond a decade – affects both large and small renewable projects. By assessing 144 projects for potential delays, covering 29GW of capacity due for grid connection in the next two years, National Grid ESO are aiming to cut the average wait time from five years to only six months.

Alongside this, Ofgem have revealed a new strategy to introduce 13 Regional Energy Strategic Planners (RESPs) across the UK, aiming to accelerate the transition to net zero by improving local energy planning⁸. These RESPs will take a localised approach, collaborating with local Government bodies and energy networks to create roadmaps for regional energy systems that will help advance the energy transition on a local level.

To learn more about DESNZ and Ofgem’s Grid Connections Action Plan, you can read their joint press release here.

You can also click here if you’d like to learn more about Ofgem’s plan to introduce RESPs across the UK.

Following industry feedback that strongly favoured the continuation of Climate Change Agreements (CCAs), the UK Government has confirmed the extension of the CCA scheme for an additional two years⁹.

The scheme offers businesses in specific energy intensive sectors the opportunity to access reduced rates of Climate Change Levy (CCL), in exchange for commitments to reduce energy consumption and CO₂ emissions. Under the current CCA scheme, companies engaging in ‘eligible processes’ to invest in and implement energy efficiency measures can claim up to 92% relief for the CCL element of their electricity bills, as well as 83% for gas.

Following this year’s Autumn Statement, DESNZ has also launched a consultation seeking input on a proposed separate six-year Climate Change Agreement (CCA) scheme, which will build upon the existing one. You can respond to this consultation until February 14^th 2024, here.

To learn more about the UK Government’s CCAs, click here.

Following discussion with sector leaders across the renewable electricity industry, the UK Government has increased the maximum strike prices for offshore wind projects within its Contracts for Difference (CfD) auction scheme to £73 per MWh¹⁰.

CfD auctions are one of the Government’s main regulatory mechanisms to support investment in new renewable energy generation; they guarantee a minimum price per unit of electricity generated, providing the financial certainty needed by developers and investors.

The move aims to address concerns raised after the last CfD auction failed to attract any offshore wind bids, attributed mainly to rising supply chain costs. Following this, DESNZ conducted a review resulting in this increase for strike prices. Floating offshore wind projects will also see a rise to £176 per MWh, while the strike price for solar power has increased to £47/MWh, making solar the cheapest power source in the UK¹¹.

Under new Government proposals, developers could also be incentivised to provide wider socio-economic benefits beyond low-cost renewable energy generation, marking a shift toward ‘non-price factors’ in CfD considerations. These will be effective from 2025, and encompass investments in local job creation, supply chain development, and sustainable manufacturing processes.

Industry experts have cautiously welcomed the changes, acknowledging their potential to restore investor confidence in the UK’s offshore wind market¹².

To learn more, you can read the UK Government’s official press release here, or to respond to proposals on introducing non-price factors to the CfD scheme, click here.

UK Government announces £960 million investment to support ‘clean’ energy manufacturing

The UK Government has revealed a £4.5 billion financial injection aimed at empowering British manufacturers across eight sectors, including £960 million for a ‘Green Industries Growth Accelerator’¹³. This includes investment for businesses involved in producing components for renewable electricity networks, with funding set for availability starting in 2025. Its plans aim to support the development of sustainable energy supply chains, bolstering industries such as hydrogen and offshore wind across the UK.

To learn more, you can read the UK Government’s announcement here.

UK Government funds new initiative to keep buildings warm using waste heat from data centres

The UK Government has awarded funding under the latest round of the Green Heat Network Fund, an initiative which will provide £65 million of funding to develop 5 new ‘green heating’ projects across England¹⁴. One of these projects, backed by a £36 million investment, will recycle waste heat from data centres into low-cost heating for over 10,000 homes and 250,000 square meters of local commercial space in London’s Hammersmith and Fulham boroughs.

The first of its kind in the UK, this initiative is an encouraging step to tackle the significant sustainability challenge posed by energy-intensive data centres. It follows last month’s launch of a new Net Zero Innovation Hub for Data Centres – an initiative which is engaging a spectrum of stakeholders in a collaborative effort to address this challenge. To learn more about the Green Heat Network Fund and the other projects receiving funding, you can visit the UK Government’s website.

If you have any questions on how any of the updates might affect your business, our team of experts is on hand to answer them. You can get in touch with us on 01217267575 or at heretohelp@brytenergy.co.uk.