Utility Week

16 | 15TH - 21ST MARCH 2019 | UTILITY WEEK Policy & Regulation This week Government unveils offshore wind deal UK's offshore wind generation capacity to be almost quadrupled from 7.9GW to at least 30GW Offshore wind will provide a third of the UK's electricity needs by 2030, under the terms of a new industry-government sector deal. This would entail nearly quadrupling the UK's offshore wind generation capacity from its existing level of 7.9GW to at least 30GW by the end of the next decade. Fresh tracts of the UK seabed are due to be released later this year by the Crown Estate to accommodate the new windfarms. The offshore wind sector deal also includes a commit- ment to increase the sector's target for the amount of UK content in homegrown offshore wind projects to 60 per cent. And the industry has confirmed that it will invest £250 million under the deal, including £100 million in a new offshore wind growth partnership to develop its UK supply chain. The deal also includes a target to boost "green collar" jobs in the offshore wind industry from 7,200 today to 27,000 by 2030, at least a third of whom should be women. Hugh McNeal, chief executive of Renewable UK, said a new body will be established under the deal to develop offshore wind industry skills through a combination of apprenticeships and retraining people from other parts of the energy sector and the military. Commenting on the launch of the sector deal, Energy UK chief executive Lawrence Slade said: "Today's sector deal, and continued investment from industry, will create a global offshore wind market set to be worth £30 billion a year by 2030." DB ENERGY BEIS and Ofgem to review retail market Fresh energy retail market legislation may occur before the next election as the result of a government review, details of which emerged on 5 March. A policy paper setting out more details on the energy retail market review, initially announced by secretary of state Greg Clark last November, was published on the Department for Business, Energy and Industrial Strategy (BEIS) website. It says the review will be jointly carried out by the govern- ment and Ofgem, with a consul- tation document on potential options expected by this summer. Progress on the review will also form part of the energy white paper, which is due to be unveiled "later this year". And the government will leg- islate in a "subsequent session of this parliament" if new pow- ers are required to implement the conclusions of the review, which is designed to lay the foundations for a post-price cap retail market from 2023 onwards. The paper states the review will cover barriers to innovation, default supply arrangements for consumers who do not engage in the market, and protections for energy customers. The exercise will join up with existing work programmes of Ofgem and the government, the review of energy industry codes and codes governance, and BEIS's energy data taskforce. See codes analysis, p18 ENERGY Tempus in legal bid to enforce shutdown Tempus Energy has filed a legal claim with the High Court in an attempt to enforce a shutdown of the capacity market a¢er the scheme was judged to be illegal by the European Court of Justice. The company has accused the government of flouting the ECJ's ruling by instructing capacity pro- viders to continue complying with their agreements and encourag- ing energy suppliers to make vol- untary capacity payments to the Electricity Settlements Company (ESC). It says the money already paid to capacity providers should be returned to customers. "We are astounded at the UK government's complete disregard for the law," said Tempus Energy founder and chief executive Sara Bell. "Energy consumers should not be paying for these subsi- dies, which have already been declared unlawful." The capacity market was approved by the Commission under EU state aid rules in 2014. However, the following year Tempus appealled the decision, arguing the scheme discriminated against demand- side response providers. The ECJ upheld the appeal in November. Sea change: fresh tracts to be released Ensuring regulatory certainty should not rule out "radical change" to the framework in which utilities operate, Ofwat's former chief executive has said. Cathryn Ross spoke on 7 March at the launch of a report on regulation by Sustainability First, which suggests although an overhaul of utilities regula- tion is "well overdue", it should not maintain existing structures. The thinktank's paper, entitled Circling the Square: Rethinking Utilities Regulation PAN-UTILITY Ross: regulatory certainty should not rule out 'radical change' for a Disrupted World, says regulation must adapt to cope with growing challenges such as climate change. Ross said: "I don't think that the importance regulators place in delivering certainty and stability should necessarily mean we shy away from radical change if we get to a point where it is clear that what we have is not sustainable. "It is better to come out with a really clear vision that obviously addresses the issues of the day." Failing to address underlying issues could render regulatory certainty "illusory", Ross said. "I don't think the point about stability necessarily leads to tinkering around the edges." Ross, who le¢ Ofwat at the end of 2017 to take up a role as director of regulatory affairs at BT Group, said regulators should no longer shy away from thorny decisions that may redistribute resources from one set of cus- tomers to another. As an exam- ple, she cited her decision not to mandate social tariffs in water because she did not believe that it was a regulator's job to trans- fer resources from one group in society to another. She was backed by SSE chief executive Alistair Phillips-Davies, who said the industry should not be "afraid" to embrace "radical change" if such an approach is required to tackle big challenges such as the drive to cut green- house gas emissions to 80 per cent of 1990 levels by 2050. See New Deal analysis, p10

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