PES Energy News – 11 April 2023 

Table of contents:

01 – ‘Awful April’ brings higher energy bills for all – but why? – The government’s fast withdrawal of support is causing hardship for families and endangering businesses and jobs, unions have warned

02 – Could wind farms be the unlikely hero in restoring UK grid during blackout? – A cutting-edge idea is just one of 53 innovative projects that have received funding from Ofgem and Innovate UK, each receiving up to £150,000

03 – Ofgem’s proposal to shock-proof energy suppliers with minimum capital requirement  – Energy firms will be required to maintain a capital target of £130 adjusted net assets per dual fuel customer from 2025

04 – Britain plans to boost energy security with floating gas terminals  – The government is reportedly working to support the installation of floating gas terminals off the coast of Britain to increase energy security and avoid future

05 – UK wastes £500k on unused energy scheme – The Treasury reportedly spent almost £500,000 on an unused energy trader scheme and external consultants

01 – ‘Awful April’ brings higher energy bills for all – but why?

As energy prices drop around the world, many are left wondering why this month, dubbed ‘Awful April’, has brought such a sharp rise in energy bills.

On Saturday 1st April, Britain’s energy regulator Ofgem’s price cap figure (£3,280) announced on 27th February came into effect – however, its impact on energy bills is predicted to be minimal, as the government’s Energy Price Guarantee, which caps the unit cost of gas and electricity, remains at £2,500 until June.

The Trades Union Congress (TUC) has warned that the government is withdrawing energy cost support too rapidly, putting families and businesses at risk.

This comes as the Energy Bills Relief Scheme has been replaced by the Energy Bills Discount Scheme – the TUC cautions that the new scheme offers lower rates of support and some businesses will receive no support at all.

Unions also say that households face significant increases in monthly bills as a scheme which provided £400 off domestic energy bills spread over six months has also expired.

According to TUC General Secretary Paul Nowak, the withdrawal of energy cost support has come too quickly, and as a result, monthly energy bills are set to rise for many people.

With inflation still above 10% and wage growth lagging, the government should have extended the support for a longer period, Nowak said.

02 – Could wind farms be the unlikely hero in restoring UK grid during blackout?

Energy regulator Ofgem and Innovate UK have announced 53 projects that will receive up to £150,000 each from the Strategic Innovation Fund (SIF).

SIF is a five-year programme aimed at spearheading the shift towards a lower carbon future in line with the UK Government’s net zero objectives.

Innovate UK estimates that the submitted innovation projects will save consumers billions of pounds over the next ten to 15 years and cut millions of tonnes of carbon dioxide emissions.

The chosen projects explore new ideas with the potential to transform the energy system and benefit consumers in the coming years. They aim to tackle challenges such as large scale battery storage, improving the efficiency of green hydrogen production, and supporting a just energy transition.

Projects include using electric vehicles to restore power to the vulnerable during power cuts, decarbonising a terraced street using a smart local energy system and using wind farms to restore the grid following a blackout.

The projects have up to three months to further explore and develop their concepts and assess their potential. The judges will then award up to £500,000 to those with the greatest potential for a six-month proof of concept phase starting in the summer.

The remaining projects will compete for funding to demonstrate prototypes starting in early 2024.

03 – Ofgem’s proposal to shock proof energy suppliers with minimum capital

The UK government is inviting bids for the next carbon capture and storage (CCUS) clusters in Scotland.

These CCUS clusters will be responsible for capturing 30 megatonnes of carbon dioxide each year by 2030, with the government identifying Aberdeenshire for one of the projects.

In his Spring Budget, the Chancellor earmarked £20 billion for CCUS, with Energy Security Secretary Grant Shapps also launching a £160 million fund to grow floating offshore wind.

Scotland will host CCUS, hydrogen and floating offshore wind projects to help achieve the UK’s overall aims.

These include 10GW of hydrogen production and 5GW of floating offshore wind by 2030.

Prime Minister Rishi Sunak said: “Thanks to our unique geography and strong expertise in clean technology, the UK is well placed to create thriving new industries in carbon capture, hydrogen and floating offshore wind across the country.”

UK Government Minister for Scotland John Lamont added: “Scotland is a key part of the UK’s net zero plans and helping to boost economic growth through green jobs.

04 – Britain plans to boost energy security with floating gas terminals

The UK Government is reportedly supporting the installation of floating gas terminals off its coast to increase energy security and avoid another energy crisis like the one experienced last winter.

These terminals would allow the UK to import liquefied natural gas (LNG) from around the world and convert it back into gaseous form to be used in the gas network.

The UK’s domestic gas supplies have been falling and the use of floating terminals could reduce the country’s exposure to gas market shocks, according to experts.

A small number of commercial firms are developing plans for these terminals, which could be quickly linked to the gas network without requiring extensive new infrastructure and can be redeployed to other markets if not needed in the future.

Government officials have said that they are working with these firms to support their developments and increase the UK’s gas importation capability.

05 – UK wastes £500k on unused energy scheme

The UK Treasury spent almost £500,000 on an emergency scheme for energy traders that was later closed.

The energy markets financing scheme (EMFS) was launched as a £40 billion government guaranteed backstop fund by the Treasury and the Bank of England.

It was designed to offer liquidity to energy traders to deal with massive margin calls, but was shut down in January when wholesale gas prices fell.

According to information obtained by the Guardian under a freedom of information request, the Treasury said it spent £465,000 on external technical consultants to create the EMFS, which had no applications.

FTI Consulting was paid £400,000 and law firm Hogan Lovells received £65,000 for their advisory roles.

The EMFS was announced by Liz Truss, then foreign secretary, in September as part of a range of contingency measures to prevent the energy crisis from worsening during winter.

However, the scheme was later closed after a sharp fall in wholesale gas prices.

According to the Treasury, energy firms were able to access necessary credit lines from commercial lenders without the need for government-backed guarantees.

The EMFS was designed to supplement commercial financing rather than replace it. The Bank of England declined to reveal its expenditure on the scheme.

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