Bryt Insight May 2024

Bryt Energy
| 10th May 2024 | Bryt Insight
Bryt Energy Market Updates
Commodity Updates
REGO Updates
New standards proposed to enhance energy flexibility
British Industry Supercharger launched to cut costs for energy-intensive industries
UK’s Energy Security Strategy still has a long way to go
Spotlight on Renewables
News in Brief
Spotlight on Statkraft

This month’s edition of Bryt Insight sees some good news for the UK’s move to a net zero energy system, as plans are announced to support greater flexibility on the grid. The National Grid ESO (Electricity System Operator) has also stated that it feels confident in its ability to operate the grid without fossil fuels for short periods by 2025, following the share of electricity generated from coal and gas over a half-hour period reaching a record low of 2.4% in April.

Additionally, whilst reports note that project delivery delays and policy gaps may be slowing progress on the UK’s Energy Security Strategy, studies show that public support for net zero remains strong.

From the UK’s lead in corporate electric vehicles, to the launch of new initiatives aimed at reducing costs for energy intensive industries, here’s what you need to know this month:

Bryt Energy Market Updates

In last month’s edition of Bryt Insight, we took a look back at the electricity market movements over the first quarter of the year. Many of our readers found our analysis useful, so for this month’s edition, we went back to our market experts to understand a few more key trends and highlights:

Commodity UPDATES
  • Electricity prices overview

Tensions in the Middle East led to an increase in electricity prices in the first half of April. Although prices began to gradually decrease in the second half of the month, in part due to reduced demand forecasts and lower gas prices, there is still a risk of increased market volatility if tensions in the Middle East escalate.

In the UK, renewable generation was strong in the first half of April, with increased wind generation causing a number of negative prices for day-ahead periods. Prices were also reduced by lower-cost electricity imported from interconnectors from France and Belgium, but this was partly countered by lower wind generation towards the end of April, as well as outages at Norwegian gas fields.

Moving into May, wind generation in the UK was low, which contributed to prices increasing. However, with better weather in the UK leading to more solar generation, prices have started to decrease again. In the short term, if May’s good weather continues, electricity prices are expected to continue on a downwards trend.

  • National Grid Electricity System Operator (ESO) anticipates lower levels of market volatility this summer

National Grid ESO has released its 2024 Summer Outlook report, anticipating lower levels of volatility in the energy market for Summer 20241. Although ESO foresees electricity supply will meet demand in the UK throughout the summer months, its report also suggests that the UK is expecting to rely on imports from continental Europe, driven by higher forward-looking prices relative to those on the mainland. Interconnectors such as the Viking Link are anticipated to play a crucial role in facilitating these imports, while new battery storage projects have helped to provide the grid with the flexibility to navigate peak demand scenarios.

The Summer Outlook Report also anticipates that minimum electricity demand will be similar to last summer. Peak demand periods on the transmission network, however, are expected to be slightly lower than they were last summer, due to more solar generation being connected to distribution networks.

You can learn more by reading National Grid ESO’s Summer Outlook 2024 report, here.

REGO UPDATES
  • Renewable Energy Guarantees of Origin (REGO) prices continue to decrease

The latest eREGO auction, which was held in April and allows generators to sell REGO certificates for every MWh of renewable electricity they produce, saw a decrease in prices for REGO certificates generated by renewable energy sources that are ‘unfuelled’ – such as solar, wind and hydro. However, there was a slight increase in prices for REGO certificates generated by renewable energy sources that are ‘fuelled’, such as biomass and anaerobic digestion, closing the price gap between the two. This price gap, which was around £1/MWh in March’s eREGO auction, has now halved, with REGO prices returning to levels seen in November and December of last year, before prices increased in January.

New standards proposed to enhance energy flexibility

The UK Government’s Department for Energy Security and Net Zero (DESNZ) has proposed introducing new consumer protection requirements for providers of smart or flexible energy services, to support end-users contributing to grid balancing efforts2.

By increasing the uptake of small-scale smart energy devices such as electric vehicle (EV) charging points and heat pumps – which are capable of adjusting electricity consumption in response to grid needs – DESNZ’s proposed measures aim to support businesses and households in reducing their consumption during high-demand periods.

Greater demand flexibility will be crucial in supporting the integration of more renewable electricity into the UK’s grid power mix, enabling the transition to a net zero energy system. By supporting businesses as they shift their electricity usage to off-peak times when electricity costs are generally lower, and the grid is less carbon-intensive, the new measures will help match electricity consumption with the availability of renewable generation, reducing the UK’s reliance on fossil fuels.

To do this, the ‘Smart Secure Electricity Systems Programme’ consultation seeks views on new consumer protection measures including:

  • Transparent pricing for easier customer comparison
  • Stricter marketing standards
  • Customer complaints and service processes
  • Universally compatible smart products that are easy to use – including standardised EV charging points

It’s encouraging to see that DESNZ are looking at how they can unlock more demand flexibility through these proposed changes, making it easier for businesses to support the UK’s electricity system on its journey to net zero by 2035.

If you’d like to respond to DESNZ’s consultation, you can do so here until it closes on June 11th, 2024.

To learn more about how your business can navigate the net zero energy transition, you can also access our series of e-guides by clicking here.

British Industry Supercharger launched to cut costs for energy-intensive industries

The UK Government’s Department for Business and Trade (DBT) has launched the British Industry Supercharger, an initiative aimed at reducing electricity costs for energy-intensive industries3. First proposed last year to build on the Government’s Energy Security Strategy, the measures aim to enhance the competitiveness of Britain’s heavy industries by aligning electricity costs with those in other major economies – supporting UK businesses in sectors such as steel, chemicals, cement and glass.

Eligible firms will benefit from exemptions from certain costs linked to renewable electricity policies, and additionally, these businesses will receive a 60% reduction in network charges, lowering their overall electricity expenses4.

The initiative is projected to save around £24-£31 per MWh for around 370 businesses across the UK, with the most electricity-intensive industries, such as steel, benefiting the most. In total, the DBT expects the support to offer savings of up to £410 million a year for energy-intensive industries.

To learn more about the British Industry Supercharger or to find out if you are eligible for support, you can read the UK Government’s press release, here.

UK’s Energy Security Strategy still has a long way to go

A new report from the Energy and Climate Intelligence Unit (ECIU) has suggested that the UK Government has ‘gone backwards’ on energy security in the past two years, highlighting policy gaps and project delivery delays5. According to the ECIU, despite the initial positive reaction to the Government’s Energy Security Strategy in April 2022, only three of the ten policy aims included in the Strategy were ranked as being partly delivered.

The report acknowledges that the Government has delivered notable successes – including establishing the National Energy System Operator (NESO), as well as introducing the low-carbon hydrogen standard, which will aid the decarbonisation of hard-to-abate sectors such as the UK’s steel industry – where it is particularly difficult to reduce emissions. However, the report highlights that many of the Government’s targets to improve energy efficiency have been missed, and renewable energy projects are not being deployed fast enough – for example, delivered no new offshore wind projects.

Despite these delays, public support for net zero efforts remains strong; a recent Britain Talks Climate survey found that the British public overwhelmingly supports stronger climate leadership from politicians, and over two thirds of respondents believe there’s still time for the Government to implement policies to tackle climate change6.

A report from Exeter University’s Environmental Intelligence Centre and Friends of the Earth illustrates that not only is stronger climate action wanted, but it’s also possible, with the UK having significant opportunities to transition to renewable energy sources. Its analysis identified vast areas of land suitable for onshore wind and solar farms, showing that England could see a 13-fold surge in renewable energy production with the right policy support7. In fact, using only 3% of the UK’s land, the areas identified in the report could support over 130,000 GWh of solar power and 95,000 GWh of onshore wind energy per year – all whilst avoiding national parks and higher-grade agricultural land.

If you’d like to learn more, you can read the ECIU’s analysis here, and Exeter University’s Environmental Intelligence Centre and Friends of the Earth’s report here. You can also learn more about Climate Outreach’s ‘Britain Talks Climate’ report by clicking here.

Spotlight on Renewables

UK Government selects two ports to help advance floating offshore wind projects

The UK Government has announced that Port Talbot in Wales and the Port of Cromarty Firth in Scotland will receive investments into critical port infrastructure to help support the UK’s floating offshore wind targets8.

The Government’s Floating Offshore Wind Manufacturing Investment Scheme (FLOWMIS) includes £160 million of funding to support both ports in becoming manufacturing hubs for components of floating offshore wind projects. These new developments are encouraging, paving a faster route for the UK to reach its target of 5GW of floating offshore wind capacity by 2030.

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

 

New tool unveiled to facilitate wind and solar projects mapping

UK Power Networks (UKPN) has unveiled a new tool that will assist 133 local authorities across London, the East, and South-East England in identifying optimal locations for community-owned wind and solar farms9. This comes after DESNZ launched an initiative to encourage local communities to embrace onshore wind projects, providing detailed case studies highlighting community benefit,s so that communities can participate in decision-making around new onshore wind developments.

You can learn more about solar and wind mapping by visiting UKPN’s website here.

 

Britain achieves new record-low for fossil fuel generation

This month, the National Grid ESO (Electricity System Operator) has stated it feels confident in its ability to, for the first time ever, run the country’s electricity network without fossil fuels for short periods by 202510. April saw the share of electricity generated from coal and gas over a half-hour period reaching a record low of 2.4%, and so far this year, we’ve seen a record of 75 half-hour periods where fossil fuels generated less than 5% of Great Britain’s electricity demand.

To learn more about this milestone, you can read Carbon Brief’s analysis here.

News in Brief

UK leads corporate EV deployment globally

A new report has revealed that the UK has the highest total deployment of corporate EVs globally – with 23,136 cars across the nation, including 7,459 new adoptions in the last 12 months11. These numbers are encouraging, showing a willingness among British businesses to take action towards net zero by electrifying their fleets.

You can learn more about EV adoption by reading The Climate Group’s ‘Charging the EV Transition’ report, here.

 

Transition Plan Taskforce launches sector-specific guidance for businesses

The UK Government’s Transition Plan Taskforce (TPT) has unveiled new sector-specific guidance to support businesses in developing robust transition plans for their operations and existing assets, to support achieving net zero by 205012. The new guidance follows the launch of the TPT’s ‘gold standard’ climate disclosure framework for businesses last year, and is tailored to support specific sectors – including banking, asset management, power generation and electric utilities – to build comprehensive transition plans that align with wider reporting regulations.

You can find the TPT’s latest transition plan resources by clicking here.

 

‘Clean’ energy propelled global economy in 2023

New research has revealed that ‘clean’ energy initiatives contributed $320 billion to the global economy in 2023 alone – equating to 10% of the overall global GDP growth13. The report, published by the International Energy Agency (IEA), focused on the manufacturing and deployment of ‘clean’ energy technologies, such as solar panels and battery storage systems, as well as sales of technologies like electric vehicles (EVs) and heat pumps. These numbers demonstrate not only increasing demand for a move to a more sustainable electricity system, but also how renewables can have a positive impact on the global economy – aligning with the IEA’s previous declaration that the energy transition is “unstoppable”.

You can learn more by reading the IEA’s report, here.

 

Weather-related insurance claims exceeded £1 billion in UK

Last year, weather-related insurance claims from UK homes and businesses together exceeded £1 billion for the first time, emphasising a clear need for urgent and robust climate action14. This rise in insurance claims was driven by various storms in Autumn 2023, including Babet, Ciaran and Debi – which are becoming more frequent as a result of climate change – and echoes a previous report from the IMF that suggested that the economic benefits of the net zero transition would outweigh the costs of doing nothing.

You can learn more about weather-related insurance claims from Climate Action’s website, here.

Spotlight on Statkraft

Statkraft announces new initiative to improve wind energy supply chains

Our parent company, Statkraft, have announced the launch of the Wind Energy Initiative in collaboration with four other wind energy industry leaders and EcoVadis. The initiative aims to support the industry in identifying and adopting practices that support Environmental, Social and Governance (ESG) goals, encouraging collaboration between trading partners to have positive impacts on their supply chains15. This includes efforts to:

  • Maintain biodiversity on wind farms
  • Ensure the well-being of individuals involved in the wind energy supply chains
  • Prioritise carbon emissions by emphasising the integration of renewable energy and embracing circular practices.

As Europe’s largest generator of renewable energy, it’s exciting to see Statkraft collaborating with other leaders within the wind energy industry to ensure sustainable production practices.

You can learn more about the Wind Energy Initiative from WindEurope’s website, here.

You can also read about Statkraft’s onshore wind power development in the UK, here.

 

Latest progress for Statkraft’s solar farm and battery storage project in Yorkshire

Statkraft’s Soay Solar Farm and Greener Grid Park in East Yorkshire has entered the second phase of its development, which includes the installation of an energy storage system16. Battery storage will play a key role in supporting the UK’s net zero energy transition and the Greener Grid Park will ensure renewable generation can be fully utilised by the UK’s electricity system.

The third and final phase of Statkraft’s project will develop the solar farm on the same site, which will provide almost 50MW of new renewable electricity capacity17. The project, which aims to be fully operational by 2026, will also enhance the biodiversity value of the site by 134%, as well as bring opportunities for community benefits with new funding to support the local area.

You can learn more about Statkraft’s Soay Solar Farm and Greener Grid Park, here.

TALK TO OUR TEAM

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.

Sources
  1. https://www.nationalgrideso.com/research-and-publications/summer-outlook
  2. https://www.gov.uk/government/consultations/delivering-a-smart-and-secure-electricity-system-implementation
  3. https://www.gov.uk/government/news/huge-boost-for-uk-industry-as-government-supercharger-rolls-out
  4. https://www.gov.uk/government/news/huge-boost-for-uk-industry-as-government-supercharger-rolls-out
  5. https://eciu.net/analysis/reports/2024/uk-going-backwards-governments-energy-security-strategy-scores-3-10
  6. https://pressreleasehub.pa.media/article/british-public-backs-stronger-climate-and-nature-leadership-new-study-16510.html
  7. https://friendsoftheearth.uk/climate/mapping-england-could-produce-13-times-more-clean-energy
  8. https://www.current-news.co.uk/uk-government-selects-two-ports-to-advance-floating-offshore-wind/
  9. https://www.ukpowernetworks.co.uk/news/powerful-partnership-puts-solar-and-wind-projects-on-the-map
  10. https://www.carbonbrief.org/analysis-fossil-fuels-fall-to-record-low-2-4-of-british-electricity/
  11. https://www.theclimategroup.org/our-work/press/charging-ev-transition
  12. https://transitiontaskforce.net/latest-transition-plan-resources-published-today/
  13. https://www.iea.org/commentaries/clean-energy-is-boosting-economic-growth
  14. https://www.climateaction.org/news/weather-related-insurance-claims-from-uk-homes-and-businesses-reaches-all-t
  15. https://windeurope.org/newsroom/press-releases/ecovadis-windeurope-and-leading-wind-industry-organisations-launch-wind-energy-initiative/
  16. https://www.statkraft.co.uk/newsroom/2024/community-fund-for-projects-in-the-east-riding-of-yorkshire/
  17. https://projects.statkraft.co.uk/soay/

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