Energy Eye - December 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.

11/12/2014

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:

   Carbon Capture and Storage    Green Deal
   Community Energy    Heat Networks
   Electricity Market Reform    Renewable Energy
   Emissions Trading    Shale Gas
   Energy Efficiency    Smart Metering
   Energy Policy    Solar Energy
   Finance    Sustainable Transport
   Funding    Wind Energy

Carbon Capture and Storage

DECC: Guidance on disputes over third party access to carbon dioxide transport and storage infrastructure: guidance on the Storage of Carbon Dioxide (Access to Infrastructure) Regulations 2011 (SI 2011/2305) that enable third parties to obtain access to CO2 transport networks and storage sites (CO2 infrastructure) on transparent and non-discriminatory terms, where this is practical and where doing so would avoid the construction of new infrastructure or enable existing infrastructure to be used or developed more effectively. Where the parties are unable to reach agreement between themselves, the party seeking access or modification may appeal to the Secretary of State. This guidance sets out the approach the Secretary of State would expect to follow if required to make a determination; it also covers the process that the Secretary of State would follow in considering whether or not to exercise the power to grant a consent subject to a variation condition or a pipeline variation notice. (28 November 2014) 

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Community Energy

DECC: Government response to the consultation on support for community energy projects under the Feed-in-Tariffs Scheme: sets out the Government's response to the proposals for supporting community energy projects under the Feed-in-Tariff (FIT)scheme. The Government has decided to introduce from 1 April 2015 new measures to enhance support for community projects, including:

  • extending the definition of 'community organisation' to include registered charities and the wholly owned subsidiaries of such organisations;
  • an additional exemption to the site rule in the FIT scheme to allow two community projects (or one community project and one commercial one), each up to 5MW, to share a single grid connection and receive separate FIT tariffs; and
  • extending the preliminary accreditation validity periods for community projects by six months for all technologies.

However, it has decided not to take forward the proposals to increase the maximum capacity ceiling for community projects under the FITs scheme from 5MW to 10MW or to change its current policy on allowing FITs to be combined with grants. By 1 April 2015, the Government will issue guidance to confirm the treatment of different community ownership models under the FIT scheme and to help community groups to come to an agreement with a commercial developer over sharing FIT payments. It will also work with Ofgem to produce additional guidance on combining grants and FITs by the end of 2014. (13 November 2014) 

DECC: Communities can create their own power stations: announces the launch of the Urban Community Energy Fund that will give community groups in England the opportunity to bid for grants of up to £20,000, or loans of up to £130,000, to help kick-start their projects. The first deadline for applications is 22 December 2014 – this is for groups that have already done some preparatory work and are ready to submit a comprehensive application. There will be further application deadlines at the end of January, February and March 2015; from April 2015, the application deadline is likely to be every second month. (13 November 2014)

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Electricity Market Reform

DECC: Interconnectors to participate in the Capacity Market from 2015: announces that interconnectors linking Britain to the rest of Europe will be able to participate in the second four-year-ahead Capacity Market auction in 2015. The eligible capacity of each interconnector will be determined on a case by case basis for the Capacity Market, taking into account both their technical reliability and an assessment of the likely future direction of electricity flows at times of stress. They will participate in the auction like any other resource and will be eligible for one year agreements and subject to the same obligations and rules of participation as domestic capacity providers. (2 December 2014)

DECC: Electricity Market Reform: Capacity Market - FAQ issue 5: additional FAQs that respond to questions raised by stakeholders following the announcement of the final policy design of the Capacity Market. (9 December 2014)

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Emissions Trading

Environment Agency: EU Emissions Trading Charging Scheme 2014/15: sets out the EA's EU Emissions Trading scheme for the EU Emissions Trading System (EU ETS). It covers charges for installation and aircraft operators, Union Registry users and for applications in respect of the Kyoto Mechanism project activities (Joint Implementation and Clean Development Mechanism). (21 November 2014)

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Energy Efficiency

Green Alliance: Greening the skyline – The challenges and opportunities of tower block retrofit: this report argues that the political and economic focus on sustainable futures brings with it the risk that cities forget their existing homes and infrastructure. It highlights how many tower blocks suffer from decay, maintenance challenges, fractured communities and poor quality communal and green spaces. They are often incredibly energy inefficient structures that result in residents paying disproportionately high energy bills. Given that tower block residents often live on lower incomes and that energy prices keep rising, this is an issue that local authorities and housing associations are finding harder to ignore. The report identifies the conditions for planning successful tower block retrofits, based on interviews and workshops with a range of experienced stakeholders. It concludes that despite the current funding context, local authorities and housing associations can achieve significant improvements. (13 November 2014)

Environment Agency: CRC Energy Efficiency Scheme guidance for participants in Phase 2 (2014-2015 to 2018-2019): this guidance manual aims to help participants comply with the CRC Energy Efficiency Scheme Order 2013. It has been updated to reflect the agreed position on EU ETS installations. (14 November 2014)

DECC: Next steps to zero carbon homes – Small sites exemption: the Government's zero carbon homes policy is that from 2016, all new homes built in England will have to be ‘zero carbon’, i.e. there should be no carbon emissions generated from the energy required to heat and light a home. The Government recognises that achieving the zero carbon standard could be particularly challenging for small builders, so it has decided that smaller housing sites in England should not face the total cost burden of delivering zero carbon homes. This consultation paper explores how this proposed exemption might work. The consultation closes on 7 January 2015. (18 November 2014)

Fuel Poverty (England) Regulations 2014 (SI 2104/3220): the Warm Homes and Energy Conservation Act 2000 places a duty on the Secretary of State to make regulations setting out an objective for addressing the situation of persons in England who live in fuel poverty. These regulations, which come into force on 5 December 2014, set out an objective of ensuring that as many as is reasonably practicable of the homes of persons in England living in fuel poverty have an energy efficiency rating of Band C. The target date for achieving this objective is 31 December 2030. As required by the Act, interim objectives underpinning this objective will be specified in a new fuel poverty strategy. (4 December 2014)

Electricity and Gas (Energy Companies Obligation) (Amendment) (No.2) Order 2014 (SI 2014/3231): this Order, which comes into force on 5 December 2014, amends the ECO Order 2012 (SI 2012/3018), which requires large gas or electricity suppliers to achieve carbon and home heating cost reduction targets by promoting the installation of energy efficiency measures at domestic properties. These targets are the carbon emissions reduction obligation (CERO), the carbon saving community obligation (CSCO) and the home heating cost reduction obligation (HHCRO). In particular, it amends the definition of "area of low income" and reduces the overall carbon emissions target. (4 December 2014)

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Energy Policy

IEEP: Getting delivery right – The EU 2030 climate and energy targets and the challenge of governance: the European Council has set out a package of targets for Europe’s climate emissions and its energy system up to 2030, with a headline goal of “at least” a 40% reduction in domestic emissions and commitments to achieve a 27% share for renewable energy, and to deliver a 27% improvement in energy efficiency. This discussion paper from the Institute for European Environmental Policy points to a number of areas where the European Council’s suggested approach risks falling short, and offers some ideas on the principles that should guide Commission proposals on implementation. (5 December 2014)

DECC: National Emergency Plan – Downstream gas and electricity: this updated document describes the national arrangements established between DECC, the downstream gas and electricity industry, Ofgem, the European Commission and other interested parties for the safe and effective management of both downstream gas and electricity supply emergencies. (11 December 2014) 

DECC: National Preventative Action Plan – Gas: the UK Risk Assessment on Security of Gas Supply covers a number of preventive actions which have been, or are being, taken to continue to improve the security of gas supply. This plan provides additional commentary on the measures being implemented to mitigate the risks affecting the security of gas supply in the UK, in line with EU Regulation 994/2010 on security of gas supply.  (11 December 2014)

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Finance

HM Treasury: Autumn Statement 2014: the Chancellor has given details to Parliament about the state of the economy in his last Autumn Statement before the General Election 2015. Announcements relevant to the energy sector include:

  • Fuel duty to be frozen 
  • A new long-term investment fund from tax revenues from shale for the North and other areas hosting shale gas developments, to capture the economic benefits of shale gas for future generations ("Sovereign wealth fund") 
  • Companies substantially benefiting from other government support for the generation of renewable energy will be excluded from also benefiting from tax-advantaged venture capital schemes, with the exception of community energy generation undertaken by qualifying organisations 
  • £25m in 2015-16 for first-time heating systems in off-gas-grid homes in England 
  • Discussions with Tidal Lagoon Power Ltd to establish whether a potential tidal lagoon project at Swansea Bay is affordable and value for money for consumers.

In addition, the Government has published an update of the National Infrastructure Plan that shows its progress on delivery and sets out its long-term plans for UK infrastructure. It identifies that over 2,500 different projects or schemes have been delivered in this Parliament. It also details the Government’s approach to ensuring that the Top 40 priority investments remain on track to deliver, as well as providing the latest detail on the timing, funding and status of each of them. (3 December 2014)

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Funding

Innovate UK: Innovation funding – £14 million to catalyse energy ideas: announces that the latest round of the Energy Catalyst competition is now open for applications from businesses that wish to develop solutions to reduce emissions, improve security of supply and reduce cost. There are three categories of funding – technical feasibility, technology development and pre-commercial technology validation. The closing date for this round of funding is 29 April 2015. (13 November 2014)

DECC: Energy Entrepreneurs Fund – Fourth phase guidance notes: the Energy Entrepreneurs Fund is a competitive funding scheme to support the development of technologies, products and processes in energy efficiency, power generation and storage. Phase 4 provides an additional £5m for projects up to 31 March 2016. It will give priority to projects that focus on CCS. The closing date for expressions of interest is 19 December 2014 and the deadline for applications is 26 January 2015.
The Govenrment has also announced the 19 projects being awarded a share of the £9m available through the third phase of the Fund. (27 November 2014)

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Green Deal

DECC: Green Deal Home Improvement Fund details announced: announces that the next round of the GDHIF will open on 10 December 2014. Householders can apply for up to £5,600 towards the cost of solid wall insulation and/or two energy savings improvements. (7 December 2014)

DECC: Green Deal and ECO measures update 2014: updates and consolidates earlier documents for organisations intending to supply products into the Green Deal and ECO markets, in light of the Green Deal (Qualifying Energy Improvements) (Amendment) Order 2014 (SI 2014/2020). It sets out which energy efficiency improvements qualify for Green Deal Finance and ECO. It also includes a number of new measures and tpdates the assessment methodology. (8 December 2014) 

DECC: The Green Deal Occupancy Assessment process: explains the Green Deal Occupancy Assessment (GDOA) process that is used to produce a report listing a package of energy efficiency improvement measures suited to a specific dwelling, their expected fuel cost savings and other information needed to facilitate the operation of the domestic Green Deal scheme. (7 December 2014) 

DECC: Green Deal accredited installer and provider Infinity Energy Organisation: case study about how a Green Deal Provider and installer has used the Green Deal to grow its business and help over 3,000 customers warm their homes. (19 November 2014)

DECC: Landlord Malcolm Langford: case study about how a landlord funded home improvement measures in one of his rental properties, using a blend of ECO, Green Deal Home Improvement Funding and Green Deal Finance. (13 November 2014) 

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Heat Networks

Heat Network (Metering and Billing) Regulations 2014 (SI 2014/3120): these regulations, which mainly come into force on 18 December 2014, implement Arts.9-11 and Art.13 of the Energy Efficiency Directive 2012/27 as they apply to the metering and billing of heating and cooling. They requirement heat suppliers to install meters and provide bills and billing information for final consumers on district heating, district cooling, and communal heating and hot water systems. (26 November 2014)
DECC has issued guidance on compliance with and enforcement of the regulations., with details of the information that heat suppliers must supply to the National Measurement Office (NMO) for the first time by 30 April 2015 and then at least every four years.

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Renewable Energy

Solar Century Holdings Ltd v Secretary of State for Energy & Climate Change [2014] EWHC 3677 (Admin) (Admin Ct): SCH and other renewable energy developers applied for judicial review of DECC's decision to close its Renewables Obligation (RO) scheme in 2015, two years earlier than expected. The announced closure included "grace periods" to protect operators who had not yet had projects accredited under the RO scheme but who had incurred significant investment. SCH contended that (1) the decision to implement early closure was ultra vires the basic statutory power in s.32LA and s.32LB Electricity Act 1989, since a firm and clear purpose of that statutory power was to preserve the 2017 closure date, not to accelerate it; (2) pre-legislative statements that the RO scheme would run until 2017 amounted to a binding assurance; (3) Government statements that the scheme would not close before 2017 gave rise to a legitimate expectation which could not be trumped or thwarted by any of the policy considerations which the Government now advanced to justify the early closure; and (4) the grace periods were retrospective and so unlawful.
The court held, dismissing the application, that (1) there was no evidence that s.32LA and s.32LB incorporated any purpose which included keeping the RO scheme in place until 2017; (2) no assurances were given at any point that the scheme would be maintained until 2017; (3) the Government's representations that the scheme would remain in place until 2017 were always subject to the overriding risk that if uptake of the scheme was such that DECC's spending limits were exceeded then the scheme would have to be modified and/or curtailed in some way in order to bring expenditure back into line. So no RO developer had a legitimate expectation that the scheme would inevitably last until 2017 irrespective of the broader financial implications for Departmental spending. Even if such an expectation did arise, the Minster was entitled to frustrate that expectation; and (4) the transitional "grace" arrangements were not unfair, even though the way in which the line was drawn would exclude some persons who had incurred expenditure which now risked being wasted. (7 November 2014)

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Shale Gas

DECC: Shale gas made simple: Plain English guide with answers to frequently asked questions about shale oil and gas and fracking. (13 November 2014)

DECC: Public engagement with shale gas and oil – A report on findings from public dialogue workshops: summarises findings from a public dialogue prepared by TNS BMRB, which explored participants' views on how to engage the public on shale gas and oil and coal bed methane. The dialogue, which was co-funded by Sciencewise, was designed to inform the Office of Unconventional Gas and Oil’s (OffUGO) public engagement policy and industry’s development of a community benefits package, and help stakeholders to develop appropriate plans for local engagement. (3 December 2014) 

EEF: UK shale gas – The manufacturers' view: much of the public debate over whether the UK should exploit its shale gas reserves has been highly polarised. Many opponents are set against shale gas extraction under any circumstances while some supporters are in danger of overstating the potential benefits. This report finds that the real situation is less dramatic. There are risks and justifiable reasons for concern, but these can and are being addressed by the industry and regulators. The manufacturing boom in the US, much of which still has to be realised, will not be repeated in the UK, but domestic shale gas extraction is still likely to help the wider UK economy, energy security and bring opportunities to the manufacturing sector. The Government needs to help ensure this potential is fully realised. (18 November 2014)

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Smart Metering

DECC: Government response to consultation on: Stage 4 Smart Energy Code (SEC) content (Part A) and Transitional arrangements in the Smart Energy Code (SEC), and consultation on additional SEC content: sets out the first part (Part A) of the Government’s response to the consultation on the content of Stage Four of the SEC, which details arrangements related to the management of smart metering in Great Britain. A second part (SEC 4 Part B) conclusions document will be published early in 2015. This document also consults on additional changes to the SEC - the closing date for comments is 31 December 2014. (17 November 2014)

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Solar Energy

DECC: Transferability of building-mounted solar PV installations: seeks views on proposals to remove a barrier for building-mounted solar PV by allowing medium and large installations to be moved between buildings without loss of Feed in Tariff payments. The consultation closes on 5 January 2015. (25 November 2014)

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Sustainable Transport

Office for Low Emission Vehicles: £30m low emission bus scheme – Preliminary guidance for participants: guidance on the ultra low emission bus scheme for local authorities and bus operators within England and Wales. The guidance outlines the principles and current thinking around how the scheme will be designed. The scheme forms part of a £500m package to grow the market for ultra-low emission vehicles from 2015 to 2020. It aims to increase the uptake of low and ultra low emission buses, speeding up the full transition to an ultra low emission bus fleet, improve air quality in urban areas and encourage investment in the UK automotive industry. The final guidance will be issued in March 2015 and the scheme will be open to bids until September/October 2015. (2 December 2014)

Office for Low Emission Vehicles: £20m ultra low emission vehicle taxi scheme – Preliminary guidance for participants: OLEV announced in April 2014 that it would make at least £20m available for an ultra low emission taxi scheme. This guidance outlines the preliminary principles and current thinking around how the ultra-low emission taxi scheme will be designed. The scheme will be open to local authroities, and will be launched in March 2015. The closing date for initial bids will be in September 2015. (2 December 2014)

DfT: £25 million funding for green transport fuel plants: announces the £25m Advanced Biofuels Demonstration Competition to enable the construction of up to three demonstration biofuel plants. The funding will be made available over three years. The competition will be run in two stages with a detailed expression of interest stage for potential bidders open until 13 February 2015, followed by full proposals in June 2015. Plants backed by this funding should be operational by December 2018 and produce at least 1m litres of biofuel a year. (10 December 2014)

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Wind Energy

RenewableUK: UK offshore wind – Opportunities for trade and investment: this guide is an introduction to UK offshore wind, aimed at investors who are considering entering the sector and suppliers looking to export from the UK. (17 November 2014)

RenewableUK: Wind Energy in the UK – State of the Industry report 2014: this report provides a snapshot of the wind industry between 1 July 2013 and 30 June 2014. It finds that the year is a critical one for the industry, as it delivers new capacity at pace while keeping one eye on the coming UK election in 2015. The industry continues to grow, and to provide an increasing proportion of UK electricity needs, but the policy  landscape remains complex and unstable. Overall 2013/14 shows a mixed picture for onshore wind. Industry continues to deploy and companies are working hard to deliver new low carbon generation. But they are faced with increasing calls for a halt to development from some in Government. Industry is enjoying success in Scotland, Wales and Northern Ireland but finding the development climate in England increasingly prohibitive. Despite the low cost of onshore wind, despite the need for new capacity to keep the lights on and despite the continued need to decarbonise, onshore wind development sees its success and progress hampered by calls for it to be held back unnecessarily. (12 November 2014)

Green Alliance: UK offshore wind in the 2020s – Creating the conditions for cost effective decarbonisation: this report discusses how decarbonisation of the UK’s electricity supply will require significantly increased deployment of offshore wind during the 2020s, representing potentially billions of pounds worth of investment into the UK offshore wind supply chain. However, short-term policy, regulatory and funding issues are causing large numbers of offshore wind projects to be shelved, putting these benefits at risk. It argues that the next government could reverse this trend by adopting a “commit and review” approach, guaranteeing a minimum market size for offshore wind during the 2020s provided the industry can deliver significant cost reductions. This report identifies how this approach could be implemented in practice. It suggests new ways for government to ensure that offshore wind projects needed by the UK in the 2020s can continue to be brought forward. (13 November 2014)

RenewableUK: Managing regulatory and consenting costs for offshore wind: the expansion of the UK’s offshore wind industry has been accompanied by changes in consenting regimes and the introduction of legislation designed to facilitate the development of nationally significant infrastructure projects. In addition, the responsibility for the provision of advice and guidance for offshore renewables was transferred to the newly formed Marine Management Organisation. These changes to consenting and advice have also been accompanied by increasingly more complex guidance and best practice. This study therefore provides a high-level assessment of whether these requirements have added to consenting and construction costs and timelines. It identifies a number of recommendations to reduce the consenting burden and reduce the cost profile of delivering offshore wind energy. (11 November 2014)

RenewableUK: Consenting preparedness of offshore wind stakeholders – Survey and recommendations: this study seeks to understand what improvements can be made, at the operational level, to the ability of statutory bodies in the offshore planning process to cope with the ramp-up in consenting activity expected beyond Round 2. The challenges have been made even more daunting by a number of policy developments which have been unfolding on parallel tracks, at least since 2008. It makes a number of recommendations that suggest ways in which the private and public sector could support the overall objectives of optimising consent preparedness (at least in the short-term) in order to meet the coming ramp-up and ensure industry achieves its commitment to Government in the medium-term; in so doing, they would be supporting the Government’s longer-term strategy. (11 November 2014)

RenewableUK: Small and medium wind strategy report 2014 – The current and future potential of the sub-500kW wind industry in the UK: this report highlights the potential size of the small and medium wind market to the UK and aims to resolve the impending crisis in the small wind industry. The report draws attention to the untapped contribution that small and medium wind can provide to the UK by 2023. It points out that the current pressure being placed on the UK’s small wind industry is "driving it towards breaking point". The document outlines a number of simple measures to resolve this, including the need for the Government to publicly back the industry and simplify the planning procedure for smaller-scale applications. The report also highlights growth in the medium wind sector, but warns that positive policies are needed in the future. (25 November 2014)

DECC: 3 offshore wind farms get the go ahead off the coast of Yorkshire, supporting up to 2,500 jobs: announces that consent has been given for Hornsea Project One – three offshore wind farms with a maximum capacity of 1200MW, which cover a 407km area located 64 miles off the Yorkshire coast. Project One is being taken forward by SMart Wind, a 50:50 joint venture between Mainstream Renewable Power and Siemens Project Ventures GmbH, and DONG Energy. (10 December 2014)

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