Latest Industry News: Edition 43

Cutting Costs and Carbon with Solar Expansion 

Solar Energy UK is encouraging the government to expand the nation’s solar capacity to 60GW by 2030, tripling the current level. 

This follows research by Durham University Energy Institute, which found that such an expansion has the potential to significantly reduce the cost of electricity while making the government’s goal of achieving clean power by 2030 more attainable. 

The analysis acknowledged that by combining this growth with increased energy storage and flexibility, this could reduce reliance on expensive natural gas imports. It also noted that this approach would lessen the need for unproven carbon capture technology in the Clean Power Plan, lower emissions, and make better use of wind energy. 

The National Energy System Operator (NESO), however, projected the need for a more conservative solar capacity of 47.4GW by 2030, which Solar Energy UK has criticised, as they anticipate that 60GW will be sufficient and result in 12% lower costs. They therefore have urged the government to adopt this alternative plan. 

 £7.3m Investment to Power Five New Research Projects 

The Crown Estate has pledged £7.3m to aid the transition to a net zero economy, by funding five new research projects.

These initiatives will be backed by the £50m Offshore Wind Evidence and Change Programme (OWEC), a collaborative effort led by The Crown Estate in partnership with the Department for Energy Security and Net Zero, and the Department for Environment, Food and Rural Affairs (Defra).

The programme intends to accelerate the adoption of offshore wind energy while promoting nature restoration through a combination of focused studies, research initiatives, and extensive evidence collection.

The five innovative research projects, backed by the £7.3m funding, include Disco Scallops, the ECHOCHANGE project, the MDE Heritage Accelerator, the POWEM project, and S3 (Subsea Sandscape).

These projects collectively combine innovation in offshore industries with a focus on environmental protection. 

£2bn Green Power Connection Approved 

A £2bn funding package has been allocated for Eastern Green Link 1 (EGL1), a subsea and underground electricity cable that will connect Scotland to northern England.

The 196km EGL1 cable will help ensure the UK's energy transition is both affordable and sustainable, as it has been designed to transfer wind energy from Torness in East Lothian to Hawthorn Pit in County Durham.

Significant cost savings are anticipated, with around £870m per year expected to be saved by reducing compensation paid to wind generators when grid capacity is insufficient. These savings are projected to lower consumer bills while supporting the UK's 2030 clean power targets.

This superhighway has been recognised by NESO as a crucial element in achieving these sustainability objectives and will facilitate the efficient transfer of renewable energy from Scotland to northern England, enhancing the reliability and capacity of the national grid. 

Ofgem’s Proposal to Reduce Delays in Energy Infrastructure 

Ofgem, Great Britain’s independent energy regulator, has proposed a new investment fund, worth between £5bn and £8bn. This finance will aid Britain’s energy transmission owners in reducing delays, controlling costs, and attracting international investment in the transition towards net zero. 

The regulator plans to introduce the Advanced Procurement Mechanism (APM) in early 2025. This system will provide transmission owners with funding to purchase key equipment, such as switchgear, steel, and cables, years before it is needed, and often before their projects are completed. 

The benefits of this innovative framework include reducing the risk of expensive supply chains, lowering build costs by purchasing materials in advance as prices rise, supporting domestic manufacturing, attracting international investment, and accelerating project delivery to meet the UK’s clean power and net-zero goals. 

Ofgem released this proposal on the 20th of November 2024, and this will run until the 18th of December 2024. 

Ofgem’s Surge in Energy Prices 

Ofgem have once again raised the energy price caps in Great Britain, with gas and electricity bills set to increase further from January 2025. 

From the start of next year, the average yearly energy bill for consumers will be around £1,738, marking a 1.2% rise, equating to an additional £21 per year. 

The regulator is encouraging customers to explore and take advantage of the growing range of options available in the energy market to find the best deals to help manage and reduce their household bills. 

Ofgem also advises customers to review their payment methods, as paying by standard credit can be more expensive, especially in the winter months, whereas switching to Direct Debit or smart PPM could save consumers up to £100. 

In addition, the cheapest deals on the market can save a typical dual-fuel customer up to £210, but some require signing up for boiler cover. Alternatively, customers can find fixed deals that save over £140 annually without additional services compared to the upcoming price cap. 

Iberdrola Issues €800m Hybrid Green Bond 

According to the National Securities Market Commission (CNMV), Iberdrola, the Spanish multinational electric utility company, has launched a hybrid green bond worth €800m in the Euromarket. 

Hybrid green bonds are designed to support the funding of climate change initiatives and are a useful solution to the growing investment demands of climate action. 

This bond is perpetual with a 4.25% coupon rate, making it its most competitive hybrid issuance in three years. The bond includes a par call option in August 2030. 

The bond was highly sought after, attracting over €3 billion in demand, which was 3.75 times the offering, and was subscribed by more than 200 international investors, primarily from Europe and the UK. 

The funds raised will be used to refinance the renewable assets associated with the 2019 hybrid, which is being replaced. The call will take place soon, keeping the company’s hybrid stack stable at 8.25 billion euros. 

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