Ofgem recently published guidance on its Energy Regulation Sandbox Service. The sandbox is a service that enables innovators to try out new ideas with guidance and support from Ofgem and industry bodies. The changes that Ofgem has announced in relation to the sandbox have widened its remit and provided more flexibility to innovators. The most significant change is that rather than having to meet strict window-based deadlines, innovators can now access the service and submit applications at any time.
Energy Minister Kwasi Kwarteng recently announced a review into the existing offshore transmission regime to address the barriers that the current single radial connection approach presents to the further significant deployment of offshore wind. The review suggests that greater coordination between industry participants – particularly between electricity networks, offshore wind projects and interconnectors – may be possible from 2025 onwards.
The Department for Business, Energy and Industrial Strategy recently ran its Capacity Market consultation on future improvements. Following the consultation, the government will now seek to make the necessary amendments to the Electricity Capacity Regulations and the Capacity Market Rules, before the prequalification window for the T-4 2024/25 and T-1 2021/22 auctions open in Summer 2020.
The Department for Business, Energy & Industrial Strategy (BEIS) recently launched a consultation on proposals regarding the consenting of large-scale electricity storage in England. As the current planning system does not distinguish between standalone and co-located storage technologies, storage developers must consider a number of issues to ensure that the electricity storage facility is consented lawfully. The BEIS's proposals provide much needed clarity in this regard.
Ofgem recently published its decision to launch a significant code review (SCR) into the electricity network access and forward-looking charging arrangements. The decision sets out the scope and guiding principles for the SCR, along with a timeline for the process. The aims of the SCR include encouraging the better use of existing network capacity and minimising future network costs.
Ofgem recently published its 'minded to' decision on its Targeted Charging Review. The decision sets out Ofgem's view that the residual aspect of electricity transmission and distribution network charges should be based on fixed tariffs for different classes of consumer rather than the other options under consideration (eg, usage during periods of peak demand). Ofgem also proposes to remove most of the remaining embedded benefits enjoyed by smaller distribution-connected generators.
Ofgem has published guidance for operators of essential services (OES) in the energy sector. The guidance aims to support OES in meeting their cybersecurity obligations under the Network and Information Systems Directive and the implementing UK law, the Network and Information Systems Regulations 2018. OES must now adhere to a timeline to demonstrate their compliance and work with Ofgem to make any necessary changes.
The Department for Business, Energy and Industrial Strategy and Ofgem recently released a progress update relating to their July 2017 joint paper "Upgrading Our Energy System: Smart Systems and Flexibility Plan". Among other things, the update discusses the steps that have been and remain to be taken to improve certainty over the treatment of storage in the current regulatory regime with the aim of providing further clarity for developers of storage facilities.
The government has released Part A of its response to the consultation on amendments to the Contracts for Difference Regime 1, primarily addressing its intention to allow remote island wind (RIW) to compete in future Pot 2 allocation rounds with less established technologies. The consultation response also refers to further proposals put to the government in relation to RIW, including improving RIW competitiveness.
National Grid recently published the provisional auction results for the 2017 T-4 Capacity Market Auction, with successful bidders having been provisionally awarded capacity agreements for delivery in 2021/22 at a price of £8.40 per kilowatt (kW) per year. The clearing price is significantly lower than that awarded in the 2016 Capacity Market Auction, where successful bidders were awarded capacity agreements at £22.50 per kW per year.
The government has released its consultation on amendments to the Contracts for Difference (CfD) regime. The consultation confirms the government's intention to allow remote island onshore wind to compete in future Pot 2 allocation rounds. It also proposes changes to the CfD contract to lower the risk to consumers from conservative load factor estimates and to restrict reliefs awarded to generators in the case of force majeure or grid connection delays.
Ofgem recently published its Draft Guidance for generators: Co-location of electricity storage facilities with renewable generation supported under the Renewables Obligation or Feed-in Tariff schemes, which is open for stakeholder comment. The guidance does not introduce new policy; rather, it is intended to provide further detail on and clarification of how the installation of storage on existing accredited sites will be treated under the Renewables Obligation and Feed-in Tariff schemes.
In November 2017 Ofgem published updates on its target charging review (TCR) and reform of electricity network access and forward-looking charges. It recently held stakeholder workshops in this regard and further engagement is envisaged in early 2018, before a consultation on the TCR's proposed policy outcomes. In addition, Ofgem has announced that it has been served with a judicial review claim in respect of its recent decision concerning the reduction of the benefits available to embedded generators.
The Department for Business, Energy and Industrial Strategy recently published its long-awaited Clean Growth Strategy. The strategy was produced to comply with the Climate Change Act 2008, which requires a report setting out proposals and policies for meeting carbon budgets. Notable policies include the return to favour of carbon capture, usage and storage and confirmation that solar panels installed with a battery will attract a reduced value added tax rate.
To date, there has been a lack of clarity on the role that distribution network operators can play in the development, ownership and operation of electricity storage. As part of the commitment to remove regulatory barriers in relation to the storage market contained in the Smart Systems and Flexibility Plan, the Office of Gas and Electricity Markets is consulting on changes to the electricity distribution licence.