Utility Week

UTILITY Week 2nd December 2016

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UTILITY WEEK | 2ND - 8TH DECEMBER 2016 | 13 Policy & Regulation This week Still good reason to worry about CPS Budget gives short-term relief with carbon price support cap, but no long-term reassurance There are still "important reasons to worry" about the future of the carbon price support (CPS) for those who want to see it maintained over the long term, despite some short-term relief in the chancellor's autumn budget statement. The mechanism will have far less of an impact on emissions once the coal phase-out is complete, and the Treasury will still face pressure from energy-intensive industries to bring down prices, Aurora Energy Research has told Utility Week. There were "sighs of relief " at many energy companies aer chancellor Philip Hammond revealed the CPS will remain capped at the current rate until 2020/21, said Aurora project leader Mateusz Wronski. "Some expressed the fear that the CPS would be scrapped. This did not happen, so at least in the short term the government has managed to provide certainty to industry that it is committed to maintaining that rate. "Crucially, the government failed to provide any clarity on its intentions for the CPS beyond 2020/21. Under the old government, the expectation was that we would at least learn what the rate would be for 2021/22, and that perhaps a longer trajectory would be outlined. Nothing of this sort happened." He added: "Despite the short-term relief, the overall atmosphere around the CPS is such that the industry still has some important reasons to worry. We see three big reasons for the government to potentially abandon the scheme or decrease the rate going forward." TG GAS Transmission must be 'more flexible' to cope with volatility The gas transmission network will need to become "more flexible" to deal with the growing volatility of supply and demand, National Grid has warned in its Gas Future Operability Planning report. Intra-day swings in the volume of gas stored in the national transmission system are on average three times as big as a decade ago. Power stations, interconnectors, industrial users, storage sites and entry terminals all want to be able to add and remove gas at shorter notice to respond quickly to changes in the market. National Grid said the growing diversity of gas supplies has led to "great variation of flow from one day to the next". The expansion of renewables will also mean that demand from the combined cycle gas turbines used to balance the system will become increasingly unpredictable. ENERGY Keirs Hill windfarm consent refused The Scottish government has refused consent for a 17-turbine windfarm near Patna in Ayrshire. Ministers turned down the application for the Keirs Hill project being developed by RES because of the impact it would have on nearby house and historic sites, "notably the Waterside ironworks complex". The windfarm would have featured turbines with a height of up to almost 150m and an installed capacity of more than 50MW. The decision was made following a public inquiry which concluded in October last year. ENERGY 'No repeat' of WHD infringements Ofgem has rated the Warm Home Discount (WHD) scheme as "very successful" in the past year, although it warned suppliers not to repeat infringements. In its WHD annual report, Ofgem identified minor contraventions of the regulations from two suppliers and warned it "does not expect to see these infringements repeated". The regulator said participating suppliers in 2015/16 generally delivered the scheme successfully, and the EDF and Npower contraventions were limited to less than 0.2 per cent of rebates provided to customers. The infringements related to not providing customer support in an efficient way. The report found that scheme participants met spending obligations for the year, with over £320 million of support to vulnerable customers. The CPS is driving coal off the UK energy system Political Agenda Mathew Beech "Post-Brexit IEM access will help to keep the lights on" More than five months on from the Brexit vote, and the shockwaves from the seismic result continue to be felt in Westminster. The latest crack in the "Brexit means Brexit" statement that became prime minister Theresa May's catchphrase over the summer comes in the form of a legal dispute over whether the UK stays inside the single market aer it has le the EU. Uncertainty around the UK's membership of the European party line, promising that he is committed to helping the UK to get the best from Brexit. For the energy sector, having access to continental power supplies – in particular as capacity continues to shrink as coal comes off the system – will help suppliers to keep the lights on and costs down. As with all things Brexit, the government and the sector will be following events closely, and hoping for a swi and clear outcome. Economic Area (EEA) post- Brexit could prevent ministers taking Britain out of the single market – a key part of the leave campaign. Brexit secretary David Davies has a lot to deal with here, but business and energy secretary Greg Clark could secretly be very pleased if the UK remains part of the EEA. Interconnection and access to the European internal energy market (IEM) is an important part of the UK's future energy strategy. Access to the IEM will be made substantially easier if the UK retains access to the single market. Clark, a remainer, unswervingly followed the

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