Utility Week

UTILITY Week 14th October 2016

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Finance & Investment This week Ofgem urged to probe network charging Head of Energy Intensive Users Group calls for a comprehensive review involving all stakeholders Ofgem needs to carry out a "com- prehensive" review of network charging "involving all stake- holders", the head of the Energy Intensive Users Group (EIUG) has argued. With transmission costs set to increase and questions remain- ing over who will pay what, "there's a problem brewing" that will have to be fixed by the regulator. Speaking at an event in London, EIUG director Jeremy Nicholson suggested there was an "element of freeloading going on" in relation to distributed generators that are able to take advantage of so-called embedded benefits. "This may range from small solar installations through to larger industrial [combined heat and power], all of which is undoubtedly low-carbon and contributing to security of energy supplies but also benefiting from the network connections," he said. "The way we've been charging for that in the past may not reflect the eco- nomic value of having that as embedded generators." Nicholson said it was a "very complex" issue and there would be "winners and losers" from any changes: "Ofgem should be looking at this in a comprehensive way involving all stakeholders, and not just relying on spontaneous code modifications every now and then from self-interested parties, which is what's been happening to date. "It will take years to change this, by the way, and change shouldn't be rushed, but I think we can all see there's a problem brewing here," he added. TG ELECTRICITY Cost of backing up solar is 'negligible' The cost of backing up solar generation and integrating it into the energy system is "neglig- ible", a report commissioned by the Solar Trade Association has found. At just £1.30/MWh it rep- resents less than 2 per cent of the current cost of solar generation. The analysis by Aurora Energy also found that tripling the vol- ume of installed capacity in the UK to 40GW – enough to meet 10 per cent of annual electricity demand – would only raise the cost to £6.80/MWh. The majority of this cost would go towards back-up gen- eration secured via the capacity market. In the central scenario – whereby 40GW of solar is installed by 2030 – this would reach £4.50/MWh. But the extra generation would have the "use- ful side effect" of reducing the cashout price in the balancing mechanism by £0.70/MWh. Solar 0is currently worth on average £1.20/MWh more than the baseload price, but by 2030 it would be worth £3/MWh less. Combining these three costs gives the £6.80/MWh total. ENERGY Energy from waste plant set to be built Work is set to begin "imminently" on a £142 million energy from waste plant, aer the Midlothian and City of Edinburgh councils signed a 25-year contract with FCC to build and operate it. The 14.1MW plant in Millerhill near Edinburgh will be able to process up to 155,000 tonnes of waste annually and is expected to start operating in 2018. The Green Investment Bank is lend- ing £28 million to the project. Each year the plant is forecast to generate around 94GWh of electricity and avoid greenhouse gas emissions equivalent to 30,000 tonnes of carbon dioxide. WATER Severn Trent wins 'landmark case' Severn Trent has successfully prosecuted a restaurant in Codsall, Staffordshire, for block- ing the sewers with fat, oil and grease, in a "landmark case". Cafe Saffron was ordered to pay a total of £5,495, including costs, at Wolverhampton Mag- istrates' Court. This is only the second example of such a case being brought in the UK. Blockages had been reported on several occasions, with complaints from neighbouring businesses that they could not flush their toilets. The restaurant was found to have caused the blockage by pouring fat used in cooking down the drain and into the sewer, where it coagulated. The restaurant has now com- mitted to installing a grease trap. Networks: clouds overhead regarding charging UTILITY WEEK | 14TH - 20TH OCTOBER 2016 | 13 Stock watch INNOGY SHARE PRICE SINCE LAUNCH ON 7 OCTOBER 37.50 37.00 36.50 36.00 35.50 Fri 7 Oct Mon 10 Oct Tue 11 Oct The separation of RWE's grid, retail and renewables operations into the new company Innogy was completed last week with its debut on the Frankfurt Stock Exchange. Shares in Innogy were initially offered at a price of €36.00 and listed at a price of €37.30. Within a few hours of trading, the price had dropped back down to €36.00. Despite a few small ups and downs since 7 October it remained at around that level at the time of going to press. euros

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