Utility Week

18 | 26TH OCTOBER - 1ST NOVEMBER 2018 | UTILITY WEEK This week £18/tonne CPS could kill coal by 2022 Research also shows lowering the CPS rate could result in a comeback for coal in the 2020s Maintaining the current Carbon Price Support (CPS) rate of £18 per tonne could push all coal generation off the power grid by 2021/22, according to new analy- sis by Aurora Energy Research. By contrast, the market intelligence firm said lowering the CPS rate in response to the recent rise in the price of EU Emissions Trading System (ETS) allowances could result in a comeback for coal in the 2020s, making it much harder for the UK to meet its climate change targets. As well as being required to purchase enough ETS allowances to cover their emissions, UK generators pay a top-up tax on the fossil fuels used for generation, called the CPS. This was introduced in April 2013 to ensure they faced a minimum price for carbon emissions, known as the Carbon Price Floor (CPF). At the time, the price of ETS allowances stood at around €5/tonne. From a starting point of £16/tonne, the CPF trajec- tory was set to rise to £30/tonne in 2020 and £70/tonne in 2030. However, since 2016 the CPS has been frozen at £18/tonne due to concerns over the competitiveness of British businesses when compared with their EU rivals. In last year's autumn budget, chancellor Philip Ham- mond said the Treasury would seek to maintain the total carbon price at around £24/tonne until the coal phase- out is completed. But in the meantime, reforms to the ETS to address an oversupply of allowances has led to a massive increase in the EU carbon price. This currently stands at €19/tonne, resulting in a total carbon price for UK generators of nearly £35/tonne. TG ENERGY Next stage of heat investment launches The Department for Business, Energy and Industrial Strategy has launched the next stage of a £320 million programme to encourage the mass rollout of heat networks. Developers are being offered grants of £5 million and loans of up to £10 million as part of the Heat Network Investment Project. The government is hoping to unlock about £1 billion of invest- ment using the seed funding. The first stage of the initiative was launched in October 2016. Up to £39 million was made available to public sector organi- sations for the pilot scheme, with £24 million awarded to nine local authority projects in April 2017 (which has since fallen to £18.5 million aer it was announced last month that one of the projects would not go ahead). The initiative has now been expanded to include all develop- ers. It will be open to applica- tions for a period of up to three years and allocations will begin in April 2019. Funding must amount to less than half of the costs incurred for construction. GAS GB set for £400m biomethane boom Up to £400 million is expected to be invested in 48 new biomethane plants by January 2020, raising the total number of operational facilities from 98 currently, to 146. Charlotte Morton, chief exec- utive of the Anaerobic Digestion and Bioresources Association, said developers are seeking to take advantage of changes to the subsidies available through the Renewable Heat Incentive scheme, implemented in May. The tariffs were restored to a higher level and a guarantee was introduced allowing applicants to secure the rate before their project is commissioned and fully accredited. The guarantee will only apply to plants com- missioned by 31 January 2020. WATER NI Water fulfils £3m sewerage scheme Northern Ireland Water (NI Water) has completed a "major" sewerage improvement scheme within the grounds of Castle Park in Bangor, County Down. The company has invested £3 million to upgrade the sewer- age network in the area and provide a "new, modern and efficient" underground pumping station. The spend is part of an over- all £12 million of ongoing invest- ment by NI Water in Bangor, which the water company says will "greatly improve" the water quality in Ballyholme Strand and North Down coastal waters. Will it be a dawn or dusk for coal generation? Stock watch PRICE OF EU ETS ALLOWANCES, ONE YEAR SSE, Drax and Orsted have written to chancellor Philip Hammond, urging him not to respond to an increase in the EU carbon price by lowering the Carbon Price Support rate in his autumn budget on 29 October. The price of EU Emissions Trading System (ETS) allowances briefly surpassed €25 per tonne in September – the highest level in almost a decade – but has since dropped to just under €19 per tonne. 25 20 15 10 5 Nov 2017 Jan 2018 Mar 2018 May 2018 Jul 2018 Finance & Investment euros/tonne Sep 2018

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