Energy Eye – April 2014

This update contains brief details of Government and EU publications, legislation, cases and other policy developments in England and Wales relevant to those interested in energy, renewables, energy efficiency and the alternative energy sector, which have been published in the past month.

14/04/2014

Nadeem Arshad

Nadeem Arshad

Partner

This update contains brief details of Government and EU publications, legislation, cases and other policy developments in England and Wales relevant to those interested in energy, renewables, energy efficiency and the alternative energy sector, which have been published in the past month.

Items are set out by subject, with a link to where the full document can be found on the internet. All links are correct at the date of publication.

If you have been forwarded this update by a colleague and would like to receive it direct please email Claire Booth.

The following topics are covered in this update:

   Bio-fuels    Finance
   Carbon Capture & Storage    Fuel Poverty
   Climate Change    Green Deal
   Community Energy    Renewable Energy
   Electricity Market Reform    Shale Gas
   Energy Efficiency    Smart Meters
   Energy from Waste    Solar Energy
   Energy Policy    Wind Energy
   Feed in Tariffs  

Bio-fuels

HMRC: Biofuels and other fuel substitutes (Notice 179E): this notice gives details of the various biofuels and their excise duty rates. It also explains the roles and responsibilities of producers (and in some cases, users) of these products. It replaces the August 2011 version. (7 April 2014)

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Carbon Capture and Storage

IEA Greenhouse Gas R&D Programme: Carbon capture and storage – Proven and it works: this booklet explains the progress made in developing the technologies and practices required for carbon capture and storage (CCS) since its concept in the early 1990s through to late 2013. It argues that CCS has been proven to be a viable climate mitigation technology for the future. (14 March 2014) 

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Climate Change

Inter-Governmental Panel on Climate Change: 5th Assessment Report on Climate Change – Vol.3: Mitigation of climate change: this third report from the IPCC looks at how to address the issues and risks identified in the first two reports by reducing those activities that contribute to human-induced climate change. It looks at current greenhouse gas emissions, the levels they will need to fall to in future, and how this can be achieved. The report recognises that climate change is a global problem and looks at the contribution all regions can make in tackling the problem.
DECC has published Key points and questions: IPCC working group 3 report on mitigating climate change, which summarises the report's key findings. (13 April 2014) 

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Community Energy

DECC: New £500,000 government fund to help community groups reduce energy bills and manage energy: announces the 12 community energy projects that have been awarded between £10,000 and £50,000 so they can form consortia, giving larger groups the resources to mentor others. (12 March 2014)

Wales Office: Wales Office Minister highlights government boost to community energy: the Wales Office Minister, Baroness Jenny Randerson has met with experts from community energy groups to discuss how local communities in Wales can take control of their energy bills by setting up their own local energy projects. (1 April 2014)

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Electricity Market Reform

DECC: Contracts for Difference regulations: seeks views on proposed regulations that will cover the process by which the Secretary of State can direct the Contracts for Difference (CfD) Counterparty to offer a CfD. Electricity Market Reform (EMR) will create a new mechanism to provide long-term revenue stabilisation to incentivise investment in low-carbon generation, CfDs. The consultation aims to provide clarity on DECC's intention to retain the power to direct the CfD Counterparty Body to enter into bespoke CfDs outside the generic CfD allocation process, and to seek stakeholder views on the regulations that will govern the way it is exercised. The consultation closes on 23 April 2014. (24 March 2014)

DECC: Consultation on the EMR operational cost levies: seeks views on the proposed budgets of the CFD Counterparty Company and Electricity Settlements Company for the period  August 2014 to March 2015. These two government-owned companies are being set up to deliver key elements of Contracts for Difference (CfD) and Capacity Market. The CFD Counterparty Company will manage CfDs (including Investment Contracts) with generators, and managing payments to and from generators and suppliers. The Electricity Settlements Company will be responsible for payment flows under the Capacity Market, including making capacity payments to capacity providers, controlling collateral draw-down and managing auction bid bonds and collateral. This consultation covers the operational cost levies for 2014/15 only. The operational cost levy figures will be included in the relevant sections of the Regulations which were included as part of the EMR Implementation Consultation. The consultation closes on 274 April 2014. (27 March 2014)

DECC: Contracts for Difference – Draft Allocation Framework: DECC has published a high level summary of the Allocation process alongside a draft of the Allocation Framework. The high level summary document describes the allocation process, in particular the intended interaction between what will become the Contracts for Difference (Allocation) Regulations 2014 and the Allocation Framework. The draft Allocation Framework sets out, amongst other things, the detail of the application and CfD offer processes, including the eligibility and qualification assessment, detailed auction rules and the valuation formula.  (8 April 2014)

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Energy Efficiency

Energy Performance of Buildings (England and Wales) (Amendment) Regulations 2014 (SI 2014/880): these regulations, which come into force on 6 April 2014, amend SI 2012/3118 so as to set revised fees for entering documents onto the register which the Secretary of State is required to maintain under reg.27 of the 2012 Regulations. The register contains data from which energy performance certificates (EPCs), display energy certificates (DECs) and air conditioning inspection reports (ACIRs) may be produced. (2 April 2014)

DCLG: Notice of Approval of the methodologies of calculation of the energy performance of buildings to demonstrate compliance with the Building Regulations 2010 in England and in respect of certain buildings in Wales: this new notice of approval sets out the national approved calculation methodologies for the calculation methodologies for CO2 emissions, fabric energy efficiency and energy performance certificates for new buildings in England, and for certain buildings in Wales, for the purposes of regs.25 and 29 of the Building Regulations 2010. This approval takes effect on 6 April 2014 and continues in effect until withdrawn by the Secretary of State or superseded. (4 April 2014)

Mayor of London: Energy Planning - GLA guidance on preparing energy assessments: guidance for developers and their advisers on preparing energy assessments to accompany strategic planning applications. Each assessment is required to demonstrate how the targets for regulated CO2 emission reduction over and above Building Regulations will be met using the Mayor’s energy hierarchy. This update to the last version of the energy planning guidance (published in September 2013) reflects the new Part L of the Building Regulations which came into force on 6 April 2014. (4 April 2014)

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Energy from Waste

DEFRA: Refuse-derived fuel market in England – Call for evidence: the Government is keen to ensure that Refuse Derived Fuel (RDF) produced for both the domestic market and for export is limited to material which cannot be effectively recycled, and that the combination of fuel and technology is sufficient to deliver clear environmental benefits. This call for evidence looks at the RDF market in England, for both domestic use and for export. It asks whether there is a case for taking action, to ensure that the waste hierarchy is fully applied and the environmentally beneficial outcomes of alternative waste management routes are fully realised, for example by introducing a common standard. It aims to fill the gaps in the evidence base to help the Govenrment determine whether there is a need for some form of intervention to deliver the desired environmental outcomes and, if so, help us to develop workable policy options. The closing date for submissions is 9 May 2014. (12 March 2014)

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Energy Policy

DECC: Scotland analysis – Energy: this paper presents the UK Government’s analysis of the energy markets and the policy implications of the debate on Scottish independence. It reviews the benefits of the current GB and UK frameworks for managing energy policy which has been integral in ensuring secure, clean and affordable energy supply and that energy liabilities are dealt with safely. It also explores some of the potential implications, costs and risks to which an independent Scottish state may be exposed to ensure Scotland’s energy needs are met. (9 April 2014)

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Feed in Tariffs

DECC: Consultation on Feed in Tariff change for hydroelectricity: seeks views on amendments to the FITs scheme to address an anomaly that resulted from the introduction of a new tariff band and rate for 100kW to 500kW hydro installations, alongside the introduction of the ability to apply for preliminary accreditation. It proposes to introduce a one-off provision to the Feed-in Tariffs Order 2012 that would enable Ofgem to accept and action a request by an applicant to withdraw their preliminary accreditation, where that application was for a hydro installation of a capacity between 100kW and 500kW and submitted to Ofgem between 1 December 2012 and 31 December 2012. The consultation closes on 29 April 2014. (1 April 2014)

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Finance

HM Treasury: Budget 2014: the Chancellor has delivered his Budget for 2014, which is set out under the themes of economy, growth and fairness. Key points of interest for the energy and renewables sector are:

  • Government departments will underspend by £7bn in 2013-14, and will continue to underspend until the end of this Parliament
  • Further efficiency savings will be required to support the Government’s commitment to put the public finances on a sustainable path; the Cabinet Office will set out an ambitious new efficiency programme to deliver savings from 2016-17 and across the next Parliament in the Autumn Statement 2014
  • The difference between the carbon price implied by the Carbon Price Floor (CPF) and the EU allowance price will be limited to £18/tCO2 from 2016-17 to 2019-20. The CPF trajectory will remain unchanged. However, where this leads to a UK-only Carbon Price Support (CPS) rate of more than £18/tCO2, the CPS rate will be capped at £18/tCO2. The CPS rate for 2016-17 will be set at £18/tCO2 
  • Review of the CPF trajectory for the 2020s, including whether a continued cap on the Carbon Price Support rate might be necessary, once the direction of reform of the EU Emissions Trading System is clearer 
  • New compensation scheme to help energy intensive industries with higher electricity costs resulting from the renewables obligation and small-scale feed in tariffs for renewable generation, from 2016-17 
  • Fuel used in Combined Heat and Power (CHP) plants for electricity generated to supply manufacturing firms to be exempt from the CPF 
  • £60m for new low carbon innovation to support carbon capture and storage (CCS) technologies that show significant potential to reduce the cost of low-carbon generation in the UK 
  • New fuel poverty target and strategy to be published, focusing on those households not connected to gas grid
  • Climate Change Levy main rates will increase in line with RPI from 1 April 2015
  • The list of designated energy-saving and water-efficient technologies qualifying for Enhanced Capital Allowances will be updated during summer 2014, subject to state aid approval
  • The government is committed to making the planning system work for major infrastructure projects and will shortly publish the outcomes of its consultation on the Nationally Significant Infrastructure Planning Regime, including a series of measures to streamline and improve the process
  • The Government is looking now to further reduce the waste and complexity of public services, including reshaping public services. New seminar series led by HM Treasury will engage with key stakeholders to consider opportunities for further reform, and to develop ideas to support further fiscal consolidation in the next Parliament
  • A new Wales Bill will devolve new tax and borrowing powers to Wales, enabling the Welsh Government to raise more of the money it spends and providing it with further tools to support growth in the Welsh economy
  • Pay awards for most public sector workers covered by the recent Pay Review Body recommendations will be limited to 1% in 2014-15; the intention is to limit awards to 1% in 2015-16
  • An extra £85m for the Apprenticeship Grants for Employers (AGE) scheme in both 2014-15 and 2015-16 for over 100,000 grants to employers

A number of documents have been published alongside the Budget Report, including the National Infrastructure Plan finance update, with information on how the economic infrastructure investment planned over the coming years (including energy and renewables projects) is expected to be financed – defining the nature and extent of the potential investment opportunity to 2020. (19 March 2014)

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Fuel Poverty

Warm Home Discount (Amendment) Regulations 2014 (SI 2014/695): these regulations, which come into force on 14 March 2014, amend SI 2011/1033 to increase the maximum amount by which a supplier’s non-core spending obligation may be reduced in scheme Year 4 (2014/15) in the event that a supplier incurs non-core spending in excess of its obligation in scheme Year 3 (2013/14). They increase the maximum reduction which may be made from the current level of 1% to a new, much higher level of 34% of a supplier’s non-core spending obligation for scheme Year 3. They do not adjust the limits on certain types of spending (namely legacy spending and spending on industry initiatives) which may count towards a supplier’s non-core spending. (13 March 2014)

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Green Deal

DECC: Draft Green Deal Code of Practice (version 4): draft revised Code of Practice that sets out requirements for those persons acting as Green Deal Providers, Green Deal Assessors, or Green Deal Installers, or Certification Bodies. Once finalised, it will substitute and revoke the Green Deal Code of Practice issued on 31 July 2013. (27 March 2014)

DECC: Green Deal quick guides: DECC has published a series that brings together all Green Deal quick guides, which provide a simple summary of various aspects of the scheme for householders, owners, tenants and landlords. (20 March 2014)

DECC: More than half a million British homes are warmer, greener and cheaper to heat: announces that the latest Green Deal statistics show that 163,000 Green Deal assessments have taken place, and  517,000 households had work done to improve their homes to make them more energy efficient through the Green Deal or Energy Company Obligation (ECO) since the schemes started last year. This is over half way to the Government’s target of 1m homes being upgraded through ECO and the Green Deal by April 2015. (20 March 2014)

DECC: New Green Deal measures and notice of approval: this divisional circular letter informs building control bodies that DECC has confirmed some additional measures that will be introduced into the Green Deal. It also clarifies where such measures are notifiable building work under the Building Regulations and whether there are competent person scheme installers who may in some cases self-certify the work where it is notifiable. (4 April 2014)

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Renewable Energy

Greenpeace: PowE[R] 2030 - A European grid for 3/4 renewable energy by 2030: this analysis by consultants Energynautics based on European weather information for 2011 and data from the International Energy Agency suggests that it is possible to get 77% of Europe’s electricity from renewable sources by 2030, but mixing renewables with coal or nuclear could add unnecessary costs to the system. (20 March 2014)

Renewables Obligation (Amendment) Order 2014 (SI 2014/893): this Order, which comes into force on 1 April 2014, amends SI 2009/785 which imposes an obligation (the renewables obligation - RO) on electricity suppliers to produce, by a specified day, a certain number of renewables obligation certificates (ROCs) in respect of each megawatt hour of electricity that each supplies during a specified period. The Order implements some of the decisions made following a number of consultations related to the RO. The changes are made in order to:

  • prevent duplication of support between the RO and the new Electricity Market Reform (EMR) arrangements under Part 2 of the Energy Act 2013; 
  • provide for a choice of support under the RO or under the new EMR arrangements in some circumstances; 
  • improve the reporting requirements on the use of biomass under the RO; and 
  • refer to the latest Combined Heat and Power Quality Assurance Standard and guidance notes.

 (31 March 2014)

DECC: New scheme offers cash incentive to households using renewable heating systems in their homes: announces the launch of the domestic Renewable Heat Incentive scheme (RHI) which offers homeowners long-term financial support  to offset the cost of installing low carbon systems in their properties. For more details, see the Ofgem website. (9 April 2014)

DCLG: Local planning and renewable energy developments: the Communities Secretary has given a written statement to Parliament on the Govenrment's plans concerning local planning decisions and renewable energy developments. He announces that he has decided to extend the temporary change to the appeals recovery criteria so that he will continue to scrutinise planning appeals involving renewable energy developments for a further 12 months. DCLG will also shortly be publishing new planning guidance to help secure the intended improvements in how communities are engaged in planning decisions on significant onshore wind applications. (9 April 2014)

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Shale Gas

National Trust: Are we fit to frack? Policy recommendations for a robust regulatory framework for the shale gas industry in the UK: this report summarises the environmental risks posed by the shale gas industry in the UK, based on the evidence review Hydraulic fracturing for shale gas in the UK, written by the project partners and peer-reviewed by the Centre for Ecology and Hydrology. The report highlights a lack of regulation around shale gas exploitation which could cause serious impacts for a range of threatened species. It also raises serious concerns about the impact of drilling and water contamination on some of the UK's most precious natural habitats. It then proposes 10 recommendations to address these risks and to ensure that regulation of the shale gas industry is fit for purpose. It calls for all protected wildlife areas, nature reserves and national parks to be frack-free zones, for full environmental assessments to be carried out for each drilling proposal, and for the shale gas industry to pay the costs of its regulation and any pollution clean-ups. (13 March 2014)

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Smart Meters

DECC: Smart Metering implementation programme – Smart Metering Equipment Technical Specifications: standard licence conditions 39 and 40 in electricity supply licences and standard conditions 33 and 34 in gas supply licences place a requirement to install metering equipment in Great Britain which complies with these Smart Metering Equipment Technical Specifications (SMETS). This amended version replaces the version dated 18 December 2012. The amendments clarify a small number of requirements following consultation. (31 March 2014)

DECC: Smart Metering Implementation Programme – Response and further Consultation on the regulatory arrangements for enrolment and adoption of Foundation Meters & consultation on the arrangements to support churn of an enrolled Smart Metering system from a DCC user to a non-user: sets out the Government's response to the December 2013 consultation on an appropriate regulatory and governance framework for projects to develop or procure systems or services under which the Data Communications Company (DCC) will enrol and operate SMETS1 meters installed during the Foundation Stage on behalf of suppliers. It also seeks views to help inform the content of the fourth stage of the Smart Energy Code, which governs the end-to-end management of Smart Metering in Great Britain. The consultation closes on 2 May 2104. It sets out the proposed regulatory and operational arrangements to apply where a consumer with a Smart Metering System that has already been enrolled in the DCC switches supplier and the new supplier is not yet a DCC user. (31 March 2014)

DECC: Changes to equipment installation requirements and governance arrangements for technical specifications: seeks views on how the Govenrment enacts the proposed updates to SMETS 2, arrangements for the provision of communications hubs and enduring governance of the technical specifications. The consultation closes on 22 May 2014. (10 April 2014)

DECC: Home Area Network (HAN) installations: energy suppliers are required to take all reasonable steps to install smart meters in GB domestic and SME premises by the end of 2020. This includes installations in 5% of properties, including some multi-dwelling units, where additional ‘range extending’ technology might be required to establish a Home Area Network (HAN) to allow consumer devices to be connected to smart metering equipment. This paper seeks views on the existing regulatory framework regarding the provision of a HAN and whether any additional requirements are needed to ensure that a HAN is provided in all property types. The consultation closes on 22 May 2014. (10 April 2014)

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Solar Energy

DECC: UK Solar PV Strategy – Part 2: DECC has published an update to its Solar PV roadmap and strategy that sets out the guiding principles for deployment of solar in the UK. The  Roadmap, published in October 2013, established the principles for solar PV deployment in the UK. This second part of the strategy focuses on its ambition for the key market segments, particularly opening up deployment on the roofs of commercial, industrial and larger public buildings. It discusses how this ambition will be realised through innovation and partnership and the benefits for jobs and investment in the UK, in addition to delivering vitally important emissions reductions. (4 April 2014)

DfE: “Power to the pupils” – Solar PV for schools: this leaflet encourages the deployment of solar PV on schools alongside promoting energy efficiency. It explains the benefits and energy savings that schools can make through solar PV. It provides a checklist and practical information on finance, installation and where to go for further advice. (4 April 2014)

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Wind Energy

RenewableUK / CEBR: The effect of wind farms on house prices: this study examines whether wind farms have an effect on the value of residential properties within a 5km radius of the site. It discusses and analyses the actual house price growth recorded based on transactions completed within a 5km radius for seven wind farm sites, comparing house prices changes in the immediate vicinity of the wind farm with those in the wider county area, from 1 January 1995 to mid-2013, using Land Registry figures. It then uses statistical tests to ascertain whether the wind farm installation had an isolated and statistically significant impact on house prices by stripping out other factors within in the economic cycle. It concludes that the descriptive and econometric analyses show that across the sites analysed, there is no evidence to suggest that there was a long-term negative impact on house prices, either during the period of construction or post completion of the wind farms. (29 March 2014)

Spatial Economics Research Centre: Gone with the wind – Valuing the visual impacts of wind turbines through house prices: this study provides quantitative evidence on the local benefits and costs of wind farm developments in England and Wales, focusing on their visual environmental impacts. Estimation is based on quasi-experimental research designs that compare price changes occurring in places where wind farms become visible, with price changes in appropriate comparator groups. Its findings contradict the CEBR research (above) - it concludes that the comparisons suggest that wind farm visibility reduces local house prices, and the implied visual environmental costs are substantial. (9 April 2014)

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