Energy Eye – August 2015

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.

13/08/2015

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:

   Biomass    Green Deal
   Combined Heat & Power    Infrastructure
   Competition    Renewable Heat
   Electricity Market Reform    Shale Oil and Gas
   Energy Efficiency    Smart Metering
   Energy Policy    Solar Energy
   Feed in Tariffs    Wind Energy

Biomass

DECC: Government response to consultation on changes to grandfathering policy with respect to future biomass co-firing and conversion projects in the Renewables Obligation: sets out the Government's decisions following the December 2014 consultation on the proposal that the support rate under the Renewables Obligation for future biomass co-firing and conversion projects should no longer be covered by DECC's grandfathering policy. It states that the Government has decided to make the following changes, with effect from 12 December 2014: 

  • the support rate under the RO for new biomass conversion and co-firing stations and combustion units should no longer be covered by Government’s grandfathering policy. This policy change will also apply to generating stations or combustion units that are already receiving support under the RO and move for the first time into the mid-range co- firing , high-range co-firing or biomass conversion bands;
  • exceptions will apply to protect those who have already made significant financial commitments. These cover: any station or combustion unit that is the subject of an investment contract awarded through the Final Investment Decision Enabling for Renewables (FIDeR) process and is awaiting State Aid clearance; or any station or combustion unit which has moved into the mid or high-range co-firing bands and generated electricity eligible for ROCs under these bands in any month before 12 December 2014.

(22 July 2015)

DECC: Summary of responses received to the technical consultation on the draft Renewables Obligation Order 2015:  summarises responses to the March 2015 consultation on a draft RO Order that would consolidate and update the Renewables Obligation Order 2009, and introduce changes to biomass sustainability and reporting criteria and outstanding RO transition measures previously consulted on in 2013 and 2014. The draft Renewables Obligation Order 2015 has now been laid before Parliament and, subject to Parliamentary approval, will come into effect from 1 December 2015. (22 July 2015)

Ofgem: Domestic Renewable Heat Incentive – Frequently asked questions for biomass sustainability: answers to FAQs for people currently receiving Domestic RHI payments for a biomass stove or boiler, or who are thinking of applying for the scheme. (31 July 2015)

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Combined Heat & Power

DECC: Tackling non-financial barriers to gas CHP: in February 2015 DECC launched a Call for Evidence on non-financial barriers to natural gas-fired Combined Heat & Power on 9th February 2015. This sought evidence to confirm indicative non-financial barriers identified by DECC’s research and evidence on the effectiveness of six potential measures to address these barriers. The responses confirmed the indicative non-financial barriers identified by DECC’s research and suggested some additional barriers. There was general support for two potential measures to address these barriers and a further two potential measures were supported by a smaller number of responses. DECC states that it is considering these responses in developing policy on addressing non-financial barriers to gas CHP and on broader measures to promote energy efficiency. (20 July 2015) 

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Competition

DECC: Letter from Amber Rudd responding to the CMA provisional findings in the energy market investigation: in early July, the CMA published the provisional findings of its investigation into the energy market. It highlighted a range of problems hindering competition in the market. This letter from the Energy Secretary responds to those findings, and sets out steps that the Government is taking already to ensure bill payers can get the best out of the energy market. (2 August 2015)

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Electricity Market Reform

DECC: Roles and responsibilities under the Capacity Market: this table explains the roles and responsibilities of the five organisations involved in the delivery of the Capacity Market: the Government, National Grid, Electricity Settlements Company, Elexon and Ofgem. (27 July 2015)

DECC: Electricity Market Reform: Capacity Market – Frequently asked questions 2015 Volume 3: further responses to queries raised by stakeholders to date. These FAQs apply for the 2015 auction and supersede all previous FAQs. They are for information only and do not supersede or replace the requirements contained in the Capacity Market Rules and the Electricity Capacity Regulations. They do not constitute legal or investment advice and prospects are urged to consult their professional advisers. DECC intends to keep these FAQs under review and to publish revised issues from time to time. (7 August 2015)

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Energy Efficiency

DECC: CRC Energy Efficiency Scheme evaluation: this is the final report on the evaluation of the CRC Energy Efficiency Scheme (CRC), that was designed to drive energy efficiency and reduce carbon emissions in large non-intensive energy users by the uptake of costs-effective energy efficiency opportunities and through a combination of reputational and financial drivers. The evaluation aimed to understand the actual impact of the CRC (in contrast to the expected impacts) in driving action on energy use and to understand which elements of the policy have or have not worked. (20 July 2015)

DCLG: Improving the energy efficiency of our buildings – A guide to display energy certificates and advisory reports for public buildings: updated guidance on the Energy Performance of Buildings (England and Wales) Regulations 2012 (SI 2012/3118) that require energy certificates showing the running costs of a building (Display Energy Certificates) to be produced and clearly displayed in public buildings that are larger than 250m² and frequently visited by the public. (10 August 2015) 

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Energy Policy

DECC: Secretary of State speech on Climate Change: the Energy and Climate Change Secretary, Amber Rudd, has given a speech to the Aviva conference, Climate Change: The Financial Implications. She set out the Government’s commitment to tackling climate change while keeping bills down in order to deliver lasting economic security for hardworking families and businesses. (24 July 2015)

EC: Consultation on a new Energy Market Design: seeks views on the issues to be considered in a redesign of the European electricity market. These include: improvements to market functioning and investment signals; market integration of renewables; linking retail and wholesale markets; reinforcing regional coordination of policy making, between system operators and of infrastructure investments; the governance of the internal electricity market; and a European dimension to security of supply. The consultation closes on 8 October 2015.
In a connected questionnaire on risk preparedness in the area of security of electricity supply, the Commission is also seeking feedback on aspects of the security of Europe's electricity supply, which are not covered in the main consultation. This paper explores in particular how national governments prevent and manage risks related to the security of the electricity supply, what roles and responsibilities should be taken on by which players, and how transparency and cross-border cooperation can be improved. (15 July 2015)

National Grid: Future energy scenarios: this report gives an insight into what the country’s energy future might look like out to 2030, based on four different scenarios. The scenarios take into account differing policy and economic landscapes, and consider the impact they might have upon energy supply and demand. They are designed to help government, consumers and other stakeholders make informed decisions about energy policy and infrastructure investment. (15 July 2015)

National Grid: Winter review and consultation: presents a review of the security of supply in gas and electricity for the last winter. The review highlights that the winter was milder than average, and demand forecasts for gas and electricity were close to National Grid’s scenario planning. Gas came from a variety of sources, with a particular increase in liquefied natural gas. In electricity, the margin of generation above demand last winter was adequate, with peak demand hitting 53.2GW. There were high imports of electricity from mainland Europe at peak times, and wind generation delivered well at 44% of its capacity.  National Grid has also launched a consultation on the coming winter, to gather market intelligence. (15 July 2015)

NAO: A Short Guide to the Department of Energy & Climate Change: the NAO is publishing a suite of short guides, one for each government department, to assist House of Commons Select Committees. This guide provides a quick and accessible overview of DECC, focusing on what the Department does, how much it costs, recent and planned changes, and what to look out for across its main business services and areas. It includes a summary of main programmes and developments, key themes from NAO reports, and has separate sections on decarbonisation, ensuring security of supply, affordability and legacy issues. (30 July 2015)

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Feed in Tariffs

DECC: Consultation on changes to Feed-in Tariff accreditation: seeks views on proposals to remove pre-accreditation and pre-registration from the FIT scheme. This will have the effect of removing the link to the tariff guarantee for installations currently able to pre-accredit under the FIT, such that installations will only receive the tariff rate as at the date they apply for full accreditation. This will mean that a developer will not be certain of the level of support they will receive under the scheme until the point at which their application for accreditation is received by Ofgem. DECC is aware that these changes will have a particular impact upon the community sector so it may consider whether there is a case for reintroducing pre-accreditation and pre-registration for communities or other groups as appropriate, as part of the later FIT review which will take place later this year. The consultation closes on 19 August 2015. (22 July 2015)

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Green Deal

DECC: Green Deal Finance Company funding to end: announces that, in light of low take-up and concerns about industry standards, there will be no further funding to the Green Deal Finance Company, in a move to protect taxpayers. The Government will work with the building industry and consumer groups on a new value-for-money approach. The Energy Secretary also announced that the Government will stop any future funding releases of the Green Deal Home Improvement Fund.
See also the Letter from Lord Bourne to Martin Callaghan, Chair of the Green Deal Finance Company, notifying him of no further funding. (23 July 2015)

DECC: Green Deal Assessment and Customer Journey follow up surveys: research by ICF International and GfK NOP of households who had a Green Deal assessment. The research explored what households have done and plan to do since having the assessment, and how this has changed over time. (23 July 2015)

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Infrastructure

Infrastructure UK: National Infrastructure Pipeline – July 2015: updated picture of planned investment in infrastructure, across both public and private sectors, to 2020 and beyond. The pipeline includes large capital projects and programmes of investment worth £50 million or more across communications, energy, flood defences, science & research, transport, waste and water. It is accompanied by an interactive timeline and an interactive map. (20 July 2015)

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Procurement

CCS: Procurement Policy Note 12/15: Availability of procurement procedures (decision tree): this PPN  note contains a new Decision Tree and guidance on the choice of procurement procedure resulting from the Public Contracts Regulations 2015. It also sets out the general policy expectations on procurement that continue to apply. (30 July 2015)

CCS:  Procurement Policy Note 13/15: Increasing the transparency of contract information: provides guidance on how to implement the transparency principles published in March 2015. It aims to increase the type and accessibility of contract and procurement data to the public. It applies to all central government departments including their executive agencies and NDPBs. It applies to contracts advertised on or after 1 September 2015. (3 August 2015)

CCS: Short form terms and conditions for goods and services: the Crown Commercial Service has published updated terms and conditions for general goods and services contracts with a value below the procurement thresholds set out in the Public Contracts Regulations 2006. They are designed for small and medium size businesses to provide ‘light touch’ contract terms for low value procurements. (31 July 2015)

CMA: Unfair contract terms guidance: updated guidance to help businesses understand what makes terms and notices unfair, what risks they can face from using unfair wording and top tips on how to ensure terms and notices are fair and clear. The guidance has been revised to take into account changes to the law under the Consumer Rights Act 2015, which will come into force in October 2015.
There is also a flowchart and a glossary of unfair contract terms. (31 July 2015)

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Renewable Heat

DECC: Renewable heat – Standards and training research: sets out the findings from research into what actions would enable the RHI scheme to deliver its full potential. It focused on training and standards which specifically cover the technologies supported by the non-domestic RHI, as well as the RHI scheme overall, the application process and heat-metering. These findings are part of a wider evaluation of the RHI being carried out by DECC that includes work to assess the performance of the RHI and the effect of both schemes on the renewable heat supply chain. (7 August 2015)

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Shale Oil and Gas

Draft Onshore Hydraulic Fracturing (Protected Areas) Regulations 2015: these draft regulations, once in force, define "protected groundwater source areas" and "other protected areas" for the purposes of s.4A of the Petroleum Act 1998, so that associated hydraulic fracturing will be prohibited within these areas. They set out further protections for groundwater and National Parks, Areas of Outstanding National Beauty, the Broads and World Heritage Sites, ensuring the process of hydraulic fracturing can only take place below 1,200m in these areas. (16 July 2015)

DECC: Amber Rudd, Secretary of State for Energy and Climate Change on shale gas: the Energy Secretary writes about the Government's encouragement of shale gas exploration and its plans to ensure that local people, communities and local authorities benefit from shale gas development. She states that the Government will be writing to planning authorities this week to make clear that there is a national need to explore shale in a safe, sustainable and timely way to help meet our objectives for secure energy supplies, economic growth and lower carbon emissions. (10 August 2015)

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Smart Metering

DECC: Smart Metering Implementation Programme – Government response to the Smart Metering Rollout Strategy consultation: sets out the Government's decisions following the March 2015 consultation on proposals to: drive SMETS2 installations; ensure parties become Data Communication Company (DCC) Users; deliver consumer benefits in an efficient rollout; ensure all new and replacement connections are smart; and setting a SMETS1 end date. (31 July 2015)

DECC: Consultation on amending Smart Meter in-home display licence conditions: seeks views on proposals to introduce flexibility in the licence to allow suppliers to undertake (with Secretary of State approval on a case by case basis) trials of alternative energy use engagement tools in place of In Home Displays (IHDs). It also proposes tightening certain IHD provisions in line with the original policy intent so that outside of these trials, the offer of an IHD is unconditional. The consultation closes on 23 September 2015. (31 July 2015)

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Solar Energy

DECC: Consultation on changes to financial support for solar PV: seeks views on proposals to control the costs of new solar PV projects of 5MW and below accrediting under the Renewables Obligation (RO). Specifically, it proposes the early closure of the RO across Great Britain to new solar PV projects of 5MW and below from 1 April 2016. It also proposes removing grandfathering for solar PV projects of 5MW and below that are not accredited under the RO as of 22 July 2015. In addition, it proposes launching a banding review for solar PV projects of 5MW and below. The consultation closes on 2 September 2015. (22 July 2015)

KPMG / REA: UK solar beyond subsidy – The transition: this report assesses the continuing cost reductions of solar PV in the UK and propose a few policy options that can enable the transition to a sustainable, subsidy-free PV industry. It assesses how solar PV could make the transition, utilising alternative non-subsidy measures to avoid the market stalling, which would negatively impact companies and employment in the industry. (23 July 2015)

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Wind Energy

Public Nuisance from Wind Farms (Mandatory Liability Cover) Bill: this Private Member's Bill has been introduced into the Commons by David Davis MP and received its 1st Reading. The Bill would enable the Secretary of State to impose obligations on wind farm operators in respect of financial cover for potential liabilities arising from cause of public nuisance. (21 July 2015)

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