Utility Week

UTILITY WEEK | 21ST - 27TH SEPTEMBER 2018 | 9 Policy & Regulation This week UK to underwrite EU energy project funds Energy projects that link the energy systems of EU countries will be supported by BEIS after Brexit The UK government has guaranteed to underwrite EU funding for transnational energy projects, including gas and electricity interconnectors, in the event of a no-deal Brexit. The Department for Business, Energy and Industrial Strategy has issued a paper outlining post-Brexit arrangements for projects that have been awarded grants from the EU's Connecting Europe Facility (CEF). The CEF supports key infrastructure projects that have been designated projects of common interest (PCI) because they link the energy systems of EU countries. These projects, which are deemed to deliver benefits for the wider EU, also benefit from a streamlined permitting process. CEF grants can pay for pump-priming work such as feasibility studies, archaeological digs and other help with construction. All but two of the interconnector projects proposed between the EU and the UK have PCI status. If there is no deal next March, when the UK is due to leave the EU, the document says the UK government will guarantee any energy grant awards made or agreed before exit day. It says: "In the unlikely event that the UK leaves the EU with no agreement in place, UK organi- sations benefiting from CEF energy grant awards will be able to continue without disruption." The government says the streamlined permitting pro- cess for PCIs will continue for a limited period. The UK government guarantee applies to all CEF grants that are not honoured in full by the European Commission. DB ENERGY Energy price cap 'will reduce competition' The incoming energy price cap on standard variable tariffs (SVTs) will reduce competition in the market, according to a report compiled by the Adam Smith Institute. Sam Dumitriu, head of research, said price differences between SVTs and cheaper fixed tariffs are not evidence of low levels of competition as has been suggested. He says "large price differences" between similar products are oen observed in highly competitive markets. He said: "Economic theory and international evidence pre- dicts that imposing a price cap on the retail energy market will lead to less customer engage- ment, the withdrawal of the biggest discounts and higher average prices. "Reduced rates of customer engagement will lessen the uptake of cost-saving innova- tions, such as smart metering and decentralised energy distri- bution, harming consumers and increasing carbon emissions. "Relative price caps will also likely lead to reduced customer engagement, lesser competi- tion in the fixed rate market and higher mark-ups on SVTs. However, access to information will likely increase customer engagement and the Competi- tion and Markets Authority's recommendation of the creation of a disengaged customer data- base should be implemented alongside further trials of other information interventions." ENERGY Outfox plans smart meter rollout Small energy supplier Outfox the Market has said it is on track to begin a rollout of SMETS2 smart meters in early 2019. The renewable energy firm launched in September 2017 and has nearly 100,000 "members" who pay wholesale prices for energy in exchange for a monthly membership fee based on esti- mated annual consumption. The company is part of Foxglove Energy Supply – the licensee that also includes Fischer Energy, Fischer EV and Eco 7 Energy. Foxglove Energy Supply has an agreement with renew- able developer Orsted, which supplies 100 per cent renewable electricity to customers of all four brands. Outfox the Market appeared on the Which? list of the five cheapest tariffs for August. However, the company's head of operations Brad Goodfellow told Utility Week that, despite this, "cheap prices aren't everything". In August, clean growth min- ister Claire Perry announced that more than 2,000 second genera- tion smart meters are now live. No-deal Brexit could put an end to EU grants Political Agenda David Blackman "There was little of relevance to the energy sector" The UK has less than 20 working days to negotiate its withdrawal agreement with the rest of the EU, and hopes are receding that the agreement will be concluded. The UK's future energy relationship with the EU matters more than it used to thanks to interconnectors. The proportion of electricity demand piped in over these physical links – 4.2 per cent – may look small, but at times of stress it rises to more like one-tenth, and that share will grow as the UK becomes Energy UK has been pushing the Department for Exiting the EU (DEXEU) for clarity on this subject for nearly two years. The department's silence is already making it hard for companies to make investment decisions. All of the technical notices are expected to be published by the end of this month and DEXEU is holding a roundtable on energy issues next week. The sector will be crossing its fingers that the picture will be a bit clearer by then. more reliant on inherently inter- mittent renewable sources. It was disappointing there- fore that last week's latest batch of government technical notices, which outline how different aspects of the economy will function in the absence of a deal with the EU, contained little of relevance to the energy sector. The only energy-specific notice related to the future of EU pump- priming funding for so called projects of common interest, such as interconnectors. Most worryingly, there was no word on how the government intends to replace the EU Emis- sions Trading System, the main mechanism for pricing carbon.

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