PES Energy News – 27 February 2023 Table of contents:

01 – Price cap falls to £3,280 but bills will rise – its current level is £4,279

02 – Britons brace for “crunch point” in energy bill – Households are likely to face more pressure as energy bills are expected to rise in two months

03 – Will the handling of energy crisis prompt 0fgem’s reshuffle? – A string of directors at Britain’s energy regulator could soon be replaced

04 – BEIS returns £1.6bn allocated to research funding – The Treasury has taken back the amount it had allocated for the UK’s involvement in the European Union’s research programme

05 – ‘Green hydrogen three times as expensive as heat pumps’ – Heat pumps are the viable option to decarbonising homes, researchers claim

01 – Price cap falls to £3,280 but bills will rise

The energy regulator has today announced the price cap is set to fall to an annual level of £3,280 in April.

Announcing its quarterly update to the energy price cap for the period 1st April – 31st June, Ofgem said: “This is a reduction of almost £1,000 from the current level which reflects recent falls in wholesale prices.”

In November, the regulator unveiled a price cap level of £4,279 that came into play in January 2023.

The energy price cap level indicates how much consumers on their supplier’s basic tariff would pay if the government’s Energy Price Guarantee (EPG) was not in place.

Although billpayers will still be protected by the EPG until the end of March 2024, the protection will be reduced resulting in a 20% increase in energy bills.

Ofgem Chief Executive Officer Jonathan Brearley said: “Although wholesale prices have fallen, the price cap has not yet fallen below the planned level of the EPG.

“This means, that on current policy, bills will rise again in April. I know that for many households this news will be deeply concerning.

“However, today’s announcement reflects the fundamental shift in the cost of wholesale energy for the first time since the gas crisis began and while it won’t make an immediate difference to consumers, it’s a sign that some of the immense pressure we have seen in the energy market over the last 18 months may be starting to ease.”

02 – Britons brace for “crunch point” in energy bill support

Households are likely to face more pressure as energy bills are expected to rise in two months Experts have raised concerns about the financial pressure households will be under in a few weeks’ time when the government’s support scheme will be slimmed down.

Speaking to the Public Accounts Committee, Andy Manning, Principal Economic Regulation Specialist at Citizens Advice, said: “We are concerned. Clearly, we have the moratorium on forced installation of prepayments at the moment, but that is due to expire at the end of March.

“However, remember what we talked about earlier, the end of March is also when the support schemes fall away. So, it is a real crunch point when we get to 1st April as the support falls away and moratorium stopping forced installation ends.”

A few days ago, the Chancellor highlighted the need to be “responsible with the public finances”, hinting at the government’s decision to stick to the rise in the EPG to £3,000 from April.

03 – Will the handling of energy crisis prompt Ofgem’s reshuffle?

A string of directors at Britain’s energy regulator could soon be replaced Ministers are reportedly mulling a plan to shake up Ofgem’s board following the exit of 31 suppliers from the energy market and the fierce criticism after the prepayment meter scandal.

It has been reported that the Department for Energy Security and Net Zero (ESNZ) has launched the process of finding a replacement for Professor Martin Cave who chairs Ofgem.

Professor Cave’s term ends in October and sources say he will not seek re-election to the position.

Prior to his role at Ofgem, from 2012 to 2018, Professor Cave was a panel deputy Chair at the Competition and Markets Authority and its predecessor.

Officials will also be tasked to find four new non-executives to replace two recently departed directors, including Christine Farnish, who resigned last year over an argument about the energy price cap.

According to reports, Jonathan Brearley, Chief Executive of the regulator, will remain in position.

04 – BEIS returns £1.6bn allocated to research funding

The Treasury has taken back £1.6 billion that it had allocated for the UK’s involvement in the European Union’s research programme, Horizon Europe, or domestic alternatives. Official documents show that £1,602,000,000 was unused funding for Horizon and Euroatom association.

The UK’s associate membership of the Horizon Europe programme was foreseen in the 2020 Brexit agreement.

However, the EU has delayed the UK’s membership due to the dispute over the Northern Ireland Protocol.

Industry resources say that UK researchers and businesses should already be part of Horizon Europe but the EU delayed the UK’s participation for nearly two years now.

A few months ago, the UK Research and Innovation (UKRI) said: “The EU is still in the process of formalising the UK’s association to the Horizon Europe funding programme. UK Research and Innovation is playing a key role in tackling the impacts of this delay.”

The UKRI committed to delivering £280 million in new funding to help address the impact of the ongoing delay in UK association to the EU’s Horizon Europe programme.

05 – ‘Green hydrogen three times as expensive as heat pumps’

Using a green hydrogen heating system would be three times more expensive than electric heat pumps in the UK and Europe.

That’s according to research by ETH Zürich, stating that producing hydrogen with renewable electricity would not provide a cheap replacement for gas.

Since residential heating accounts for close to 13% of Europe and the UK’s greenhouse gas emissions, changing the way homes are heated is deemed critical by governments to achieve net zero targets.

Cost and ease of implementation was explored by the researchers in 13 different scenarios – looking to decarbonise heat in 27 European countries by 2040.

They explained that green hydrogen would be too expensive to heat homes, as around five or six times more wind and solar capacity would be needed to create the required amount of the green gas.

The study reveals that just 0.04% of the hydrogen currently produced is green – and with other sectors also relying on the gas to decarbonise, the demand would be too high considering the available infrastructure if the demand was shifted onto household heating.

In addition to building the new infrastructure needed to make the hydrogen, the cost of production and storage would also make it more expensive than heat pumps.

Our energy news is provided by https://www.energylivenews.com/