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A round up of key developments in the energy sector covered by Lexis®PSL Energy this week.
Energy analysis: Anna Sweeney, senior knowledge lawyer in the infrastructure, projects and energy team at Addleshaw Goddard, outlines the government’s latest consultations on the capacity market (CM) and explains what’s coming next.
The European Commission has reached the preliminary conclusion that the UK Capacity Market contributes to an objective of common interest and is necessary. The Commission has invited parties in the UK to submit their comments and to provide all information that may help assess the measure. The letter inviting comments was published in the Official Journal on 22 March 2019.
The Department for Business, Energy & Industrial Strategy has published the Capacity Market (Amendment) (No 2) Rules 2019. The rules come into force on the same day that the Electricity Capacity (No 1) Regulations 2019 come into force. The rules amend Rule 1.2, 1.3 in Chapter 1 (General Provisions) and make amendments to Chapter 16 (Modifications in respect of Capacity Agreements existing on 15 November 2018 and in respect of the T-1 Auction for the Delivery Year commencing on 1 October 2019). The rules enable the T-1 2019 auction to operate during the scheme’s ‘standstill’ period, pending the outcome of the European Commission’s in-depth investigation of the UK’s Capacity Market.
The Department for Business, Energy & Industrial Strategy has updated its guidance notes and application form for its Storage and Scale competition. The competition is seeking innovative and replicable solutions in order to offer a market competitive alternative to conventional commercial large-scale energy technologies. Up to £20m in funding will be available from 2019-21 to fund up to three demonstration projects. The deadline for operational testing is December 2021.
Ofgem has published guidance for all Great Britain and Northern Ireland licensed energy suppliers on complying with the Renewables Obligation (RO). The guidance sets out how Ofgem calculates supplier obligations and what suppliers must do to comply. It also sets out the compliance process, how Ofgem sets budgets for recovering administration costs, and the buy-out and price mutualisation ceilings. The mutualisation ceilings have been updated for 2019/20. The guidance has also been updated to reflect the exemption in England, Scotland and Wales for Energy Intensive Industries from the indirect costs of the RO (not introduced in Northern Ireland).
RenewableUK has announced that it has launched a new industry group to set out the floating offshore wind industry’s strategy for large-scale deployment of floating wind farms in the UK. In partnership with Scottish Renewables, the Floating Wind Steering Group will meet regularly with the aim of creating a vision for the future of floating wind and its development in the UK. The group is made up of representatives from developers and supply chain companies from various regions within the UK. Floating offshore wind was mentioned in the Offshore Wind Sector Deal and the technology is recognised to be valuable in helping the government reach 50GW of offshore wind generation by 2050.
The Oil and Gas Authority (OGA) has begun to look at how it can manage the energy transition while simultaneously working towards maximising the recovery of UK oil and gas. This includes a new project exploring the potential of a more integrated offshore energy sector, which would see closer collaboration between oil and gas production and offshore renewables.
The Department for Business, Energy and Industrial Strategy has opened a consultation on designing the Industrial Energy Transformation Fund. The £315m fund will aim to help businesses with high energy use to cut energy bills through becoming more efficient and transitioning to lower carbon energy. The open consultation closes on 31 May 2019.
The government entered into four new decommissioning relief agreements in 2017/18, bringing to 92 the number of deeds entered into since October 2013. Total payments made under all deeds up to the end of 2017/18 were £50.8m. Two payments were made in 2017/18 totalling just over £33m (after adjustment) as a result of a company defaulting on its decommissioning obligations. These deeds are the government’s contractual approach to providing oil and gas companies with certainty on the level of tax relief they will receive on future decommissioning costs.
The Oil and Gas Authority (OGA) has launched the UK Oil and Gas National Data Repository (NDR), one of the largest ever single open releases of data. The NDR is an online platform with 130 terabytes of geophysical, field, well and infrastructure data covering more than 12,500 wellbores, 5,000 seismic surveys, and 3,000 pipelines. It aims to open new investment, technology and exploration activity by maximising economic recovery of remaining oil and gas supplies.
The Department for Business, Energy & Industrial Strategy (BEIS) has published new guidance for stakeholders on shipping radioactive sources between the UK and EU if the UK leaves the EU without a deal in place.
SI 2019/530: This enactment is made in exercise of legislative powers under the European Union (Withdrawal) Act 2018 in preparation for Brexit. This enactment amends and revokes provisions of UK primary and subordinate legislation and retained direct EU legislation in order to ensure that legislation governing the UK’s energy systems will function effectively if the UK leaves the EU. These Regulations are intended to apply in the event that no deal is reached on the UK’s withdrawal from the EU. It comes into force on exit day. (Updated from draft on 21 March 2019.)
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