Utility Week

UTILITY WEEK | 16TH - 22ND FEBRUARY 2018 | 3 This week 4 | Seven days 6 | Interview Lucy Darch, chief executive, Wave 11 Policy & Regulation 11 | News Labour: 'zero cost' to renationalise utilities 12 | Comment Jonathan Brearley, Ofgem 13 | View from the top Stephen Wheeler, managing director, SSE Ireland 14 | Analysis Interconnectors beat gas in latest capacity auction 16 | Analysis DNOs under fire 17 | Analysis Southern Water singled out by Ofwat for scrutiny 18 | Market view Incentivise banks to boost green investment 19 | Opinion Alex Graham and Jamie Harrison, Egremont Group 20 | Market view Coal mine energy storage 21 Finance & Investment 21 | News Murphy acquires Carillion's power arm 22 Operations & Assets 22 | High viz ORE Catapult 24 | Comment Chris Clarke, WWU 25 | Analysis How big a problem is water theft? 27 Customers 27 | News Energy firms could share benefits data 28 | Comment Gillian Cooper, Citizens Advice 30 Community 31 | Disconnector GAS 18 | Market view Incentivise banks to boost green investment 24 | Comment Chris Clarke, WWU WATER 17 | Analysis Southern Water singled out by Ofwat for scrutiny 25 | Analysis How big a problem is water theft? ELECTRICITY 13 | View from the top Stephen Wheeler, SSE Ireland 14 | Analysis Interconnectors beat gas in latest capacity auction 16 | Analysis DNOs under fire 20 | Market view Coal mine energy storage 21 | News Murphy acquires Carillion's power arm 22 | High viz ORE Catapult ENERGY 6 | Interview Lucy Darch, Wave 11 | News Labour: 'zero cost' to renationalise utilities 12 | Comment Jonathan Brearley, Ofgem 19 | Opinion Alex Graham and Jamie Harrison, Egremont Group 27 | News Energy firms could share benefits data 28 | Comment Gillian Cooper, Citizens Advice Pitney Bowes: Make self service smarter and more engaging http://bit.ly/2nAa2rC CGI: Demand side flexibility in UK utilities http://bit.ly/2hrMapA Knowledge worth Keeping Visit the DownloaDs section of Utility week's website http://www.utilityweek.co.uk/ downloads Generators take aim at interconnectors A shock low clearing price of £8.40/kW in the latest four-year-ahead capacity auction took many market participants and commentators by surprise (see analysis, p14). Recovering their poise, officials at BEIS were quick to crow that the result proves the capacity market (CM) is working effectively. Elsewhere, however, the clearing price has reignited a long- smouldering grudge between owners and developers of indigenous generation – especially new gas – and interconnectors, which bid enthusiastically in the recent auction, securing agreements for a combined 2.2GW of capacity. Indigenous generators feel hard done by because, they say, inter- connectors do not play on a level playing field. They are not subject to the same transmission charges or carbon taxation, for example. At the same time, they have generous de-rating factors and access to a wider array of revenue streams, including secure cap and floor arrangements for new interconnectors. This distortion should be remedied with swi and robust action, similar to that taken by Ofgem last year to cull benefits for embed- ded generation, say the complainants. Nor are they above pulling on the heartstrings of Brexiteers, suggesting government needs to do some soul searching about the extent to which it is really happy to rely on foreign power sources in the future. Advocates of the CM counter that indigenous generators are sore losers. It's not the fault of the mechanism that market conditions are simply not right yet for bringing forward new gas-fired generation, they argue. They add that enough has already been done to make conditions favourable for combined-cycle gas turbine investors. But rather than pushing for tweaks to CM rules, is there another, bolder way to resolve dissatisfaction with the treatment of intercon- nectors in auctions? Next year, France will trial a model for securing future capacity that excludes interconnectors as a standalone technology and allows foreign generators to bid in. This rightly recognises that interconnec- tors are not generators, merely conduits for power, and could open up a bigger realm of opportunity for capacity agreements to prospec- tive new generation developers. Brexit negotiations may yet make a pan-European capacity regime a pipe dream. But France's experiment in 2019 will be an interesting proof of concept. It only remains to be seen whether international generators respond competitively to the call. Jane Gray, deputy editor, janegray@fav-house.com Leader Jane Gray

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