1 | P a g e Issue 17 | September 2018
Local Energy Matters
In this issue: Focus on: East Anglia energy news | East of England tariffs | Discontent at FiT closure | Research on residential energy efficiency| Electric vehicle news | Pixie Energy’s second annual conference
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East of England energy news South Cambridgeshire council houses top energy efficiency leaderboard Following its four-year, £15mn ‘greening’ programme, South Cambridgeshire council properties have been ranked among the most energy-efficient in the country. The council’s 5,700 homes received an overall Standard Assessment Procedure rating of 75.5, which is equivalent to an average Energy Performance Certificate ‘C’ score. Work as part of the programme included installing loft and solid wall insulation, improving heating systems and fitting triple-glazing and draft-free windows and doors. South Cambridgeshire District Council’s Lead Cabinet Member for Housing, Councillor Hazel Smith, said: “The cheapest unit of energy is the one you never use, so it’s excellent news that this work has enabled our tenants to cut energy consumption”.
Norfolk clean-tech firms combine on battery technology Great Yarmouth’s Proserv Energy has been awarded a contract by Hethel-based battery storage developers Connected Energy to build the latest version of its E-Stor energy storage system. The E-Stor system is formed through grouping second-hand electric vehicle (EV) batteries together to offer large-scale power storage. This allows for the lifetime of the batteries to be extended, increasing the sustainability credentials of EVs. Peter Beasley, Operations Director at Connected Energy, said: “East Anglia is a hot-bed of innovation and excellence for the clean-tech sector and work with Proserv is the perfect example of a specialist technology ‘cluster’ at work”.
East Anglian farm with renewable assets up for sale Listed for sale at £200mn, Strutt & Parker (Farms) Ltd is one of the UK’s largest farm companies with assets and farmland across Essex, Suffolk and Cambridgeshire. The farms’ assets include two anaerobic digestion plants, onshore wind and both ground and roof-mounted solar panels. The total revenue generated from its renewable energy investments is in the region of £7.6mn, with potential for this figure to further increase as the cost of harnessing renewables continues to decrease.
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Tariff headlines
Wholesale costs rise above average tariff changes
Wholesale prices continued to increase in August, and were up 6% on July’s prices, and 34% on August 2017. In contrast to this, the average tariff price on the market increased by just 1% month-on-month and 6% year-on-year. This difference between wholesale increases and average tariff prices represents a reduction in margin of £51 year-on-year. The disparity in price rises, along with increases in non-energy costs, presents a picture where suppliers’ profit margins are decreasing. We might expect to see further price rises over the winter unless wholesale prices fall dramatically.
Suppliers announce safeguard increases On 7 August, Ofgem announced that the level of the safeguard tariff cap, formally the prepayment tariff cap but now with the inclusion of Warm Home Discount customers, is set to rise from £1,089 to £1,136/year for an average consumer from 1 October. The increase is mainly driven by rising wholesale gas and electricity prices. Following the announcement, eight national suppliers announced increases to their prepayment tariffs. British Gas, EDF, E.ON, npower, Scottish Power, SSE and First Utility all announced new tariff prices for October in line with Ofgem’s cap, having maintained their positions at within £1/year of the cap. Co-operative Energy was the only supplier announcing an increase which showed slight differentiation from the cap level, with a 4.2% increase to £1,129/year on average, £7 below the cap. Other suppliers do, however, continue to offer deals significantly cheaper than the energy cap.
Supplier smart strategies diverge
A smart tariff uses a smart meter to determine how much electricity is consumed in each half-hour and allows suppliers to charge variable rates in various periods. For example there could be different rates within the day or cheap electricity at weekends. Suppliers have recently demonstrated contrasting strategies in smart tariffs. Octopus Energy announced plans to expand its smart Agile time-of-use tariff next year, after its original 500-place limit was “hit quickly”. E.ON has also recently launched its Secure Bill tariff. In contrast to Octopus’ changeable time-of-use proposition, the Secure tariff fixes customers’ annual bills based on their previous year’s consumption, and follows smart-only tariffs from a range of suppliers in providing a way for customers to engage in monitoring their consumption, even if it has no immediate effect on their tariff prices.
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East of England tariffs
In this section, we present the cheapest tariffs for various customer types in the Eastern region. These are based on typical electricity and gas consumption values. The three main types of tariff are shown in the table below.
The average price of the lowest cost SVT across all consumer types is £779/year. This is £68/year cheaper than the lowest cost fixed tariff available in the month. Outfox the Market retained its position as the cheapest supplier of SVTs to customer types A-D and took the place of Powershop this month as the cheapest supplier for customer types E-G. ENSTROGA offered the single cheapest fixed tariff supplier for all customer types in September.
For PPM tariffs, Nabuh Energy offered the cheapest rates across customer types A-E, with Our Power losing its title as the cheapest supplier in August for customer type E. It now only provides the cheapest tariff for customer types F and G. Prices rose across all customer types this month, by as much as £28/year in the case of customer types B and G. This is further evidence of the imposed tariff price cap raising low-end PPM prices.
Tariff Definition
Standard variable tariff (SVT) A supply contract with an indefinite length, which has variable prices that can go up and down with the market.
Fixed tariff Offers guaranteed standing charges and unit rates, usually until a defined end date.
Prepayment (PPM) tariff
A tariff for customers with prepayment meters, which enables payment for energy in advance through ‘topping-up’ using prepay tokens, cards or a key.
£916
Nabuh Energy
A. Smaller electricity-heated
ENSTROGA
£828 £737
Outfox the Market SVT
Key
Fixed
PPM
Best buys in Eastern region
Supplier
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Nabuh Energy
£1,287
B. All other electricity-heated
£1,195
ENSTROGA
£1,057
Outfox the Market
C. Smaller non-metered fuel-heated
£741
Nabuh Energy
Nabuh Energy
£550
£490
ENSTROGA £444
Outfox the Market
D. All other non-metered fuel-heated
£673
ENSTROGA
£597
Outfox the Market
E. Single adults in social rented flats
£1,064
£959
F. Younger working families in medium-sized rented houses
£914
£857
ENSTROGA
£768
Outfox the Market
Nabuh Energy £722
Outfox the Market
ENSTROGA
Our Power
G. “Average” mains gas-heated households
£1,127
£1,015
£980
ENSTROGA
Outfox the Market
Our Power
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British Gas faces critics over new unlimited tariff British Gas’ latest tariff offers consumers unlimited energy use for a whole year at a price of £1,200 for average customers. The announcement comes just weeks after E.ON’s new tariff which would fix consumer bills at £1,224 per year for typical consumers. The unlimited tariff has faced criticism for both its ‘poor value’ and environmental insensitivity. In order to benefit, consumers would need to consume 19% more energy than usual according to British Gas. The supplier, however, claims that the ‘peace of mind’ associated with the tariff makes it a worthwhile deal. Environmentalists have also criticised the tariff for sending out “the wrong message” and encouraging wastefulness which could affect the UK’s ability to meet its climate targets.
UKERC report details rise of UK community energy projects Research from UKERC has suggested that there are approximately 300 community organisations currently running some kind of energy related project in the UK. It says this has grown consistently since the mid-2000s and has accelerated since 2010, as the wider UK energy system began to further decentralise. It attributes this acceleration to solar PV uptake as a result of renewable energy incentives such as the Feed-in-Tariff. There is currently an estimated 121MW of community energy generation capacity in the UK. Despite this, it estimates that community energy still only accounts for approximately 1% of the UK’s entire renewable electricity output.
Engie strikes white label deal with UK local authority Cheshire West and Chester council are set to be recipients of an Engie designed local energy platform: Qwest Energy. The platform will be capable of handling facilities management, customer services, digital transformation and workplace solutions to its customers. Paul Roberts, managing director of Engie’s home energy business, speaking about the customers of Qwest Energy, said it “will in the future enable them to access a range of new technologies and services for their homes including batteries, PV and electric vehicle infrastructure”. The deal will also see creation of a £600,000 community fund over the next five years, which is anticipated to be partly invested into measures to tackle fuel poverty.
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REA and SPP reveal solar industry unease from proposed FiT closure A survey carried out by the Renewable Energy Consumer Code (RECC), a subsidiary of the Renewable Energy Association (REA), alongside a poll undertaken by the Solar Power Portal (SPP), has revealed substantial unease within the solar industry due to the announcement by BEIS in July to close the Feed-in Tariff (FiT) scheme to new applicants at the end of March 2019. The REA found that approximately 78% of UK installers are considering staff reductions, while 58% of UK solar installers interviewed by SPP are thinking of downsizing their UK coverage or leaving the industry entirely. The survey of 140 RECC members, once replicated across the UK solar industry, reveals that the closure of the FiT scheme and removal of export tariffs could incur thousands of job losses. Half of those surveyed admitted to cutting their workforce by three-quarters to reduce costs. To put it into perspective, the last major change to the FiT scheme saw an estimated 9,000 job losses because of cuts to solar tariffs. The REA’s response to the government’s proposals, titled Consultation On The Feed-In Tariffs Scheme, argued that export tariffs for small-scale renewables should be retained after closure to prevent significant impacts to the sector. This comes partly because of an impact assessment by BEIS, which indicates that, without a suitable replacement for the export tariff, the average returns of solar installations could drop from around 5% to 1-2% per year. They suggested that new targeted tax measures could be introduced, including 0% VAT for onsite renewables, as well as the introduction of the Enterprise Investment Scheme (EIS) and Enhanced Capital Allowance (ECA) relief to maintain continuous deployment rates of new solar installations.
Our latest insight paper UnFiT for Purpose aims to address the issue of securing a route to market for small-scale low-carbon generation following the Feed-in Tariff (FiT) closure to new applicants at the end of March 2019. It recommends a Transitional Offtake Tariff to support continued deployment of small generators from April 2019 until new local markets can be shown to work. This could be achieved at no cost to consumers by tying export rates to system values. It advocates a continuing obligation on suppliers to purchase surplus energy from solar sites below 250kW. It also proposes retention of guaranteed market access for community energy schemes at a higher threshold of 500kW given their reliance on certain export payments. Contact us to request a free copy at [email protected]
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Research shows huge potential for residential energy efficiency
A paper, The Remaining Potential for Energy Savings in UK Households, published in the journal Energy Policy, has explored the potential energy savings that could be made by improving efficiency of the UK housing stock. Total UK household energy use decreased by 19% between 2002 and 2016 despite a 12% increase in the number of households, with this largely attributed to the implementation of energy saving measures. However, despite these improvements, according to government data, residential buildings have the highest potential for reducing carbon emissions at 32%. Considering innovation in technology and delivery, energy demand of the UK could potentially be cut by more than 50%. The paper looked at the technical potential of energy efficiency measures, and two further scenarios called “cost-effective” and “limited ambition”. The associated reduction in direct emissions by 2030 compared to a 2015 baseline are 10% for the limited ambition scenario, 16% for the cost-effective scenario and 75% for the maximum technical potential, which includes deployment of all technologies currently available to the housing stock without regard to their cost effectiveness. The limited ambition scenario is based on a projection of energy efficiency measures that will be installed by 2035 if current policies continue to be deployed. The cost-effective scenario includes all energy efficiency measures that could potentially be installed and are estimated to be economically beneficial. Around 47% of total savings by 2035 under the limited ambition scenario would be achieved through building fabric improvements, boiler replacements and upgrades to existing heating controls. The net present value of the cost-effective scenario is estimated to be approximately £7.5bn, 54% of which is accounted for by energy savings, 37% by greenhouse gas savings, and the rest coming from wider social benefits. The value of all the wider benefits could total as much as £47bn. The research identifies scope for huge energy efficiency gains in the residential sector. However, translating this into workable delivery solutions remains challenging, given current policy and funding ambitions.
Non-domestic energy efficiency commissions highest since 2016 A report by Bloomberg NEF and Energy Efficiency Verification Specialists Insight has revealed that non-domestic energy efficiency commissions have surpassed 2017 figures for the second quarter of 2018, with approximately 72% of business and industry consumers commissioning projects. This is the
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highest rate since 2016 and marks a sharp rebound in interest for energy efficiency projects, following five quarters of below average investment. The largest increases in measures taken up include building energy management systems. 20% more of these systems, which look at and control energy generation and use across an entire building in one system, were deployed in quarter two 2018 compared to the four-quarter average. Sub-sections of building management system, such as lighting controls, heat exchangers and in-office thermal control systems, increased to a similar level. These changes may be linked to shifting concerns of business and industry owners, with over a quarter stating their largest issue of concern is related to customer demand. Trends may also have shifted in response to BEIS’s recent consultation Building a Market for Energy Efficiency: Call for Evidence.
Liberal Democrats call for better housing standards A motion was passed at the Liberal Democrat conference on 17 September calling on the government to improve housing standards. The party called for a commitment of at least 50,000 new social homes for rent to be built every year over the next decade. The motion included calls for better environmental standards for housing to reduce both fuel poverty and greenhouse gas emissions. The call relates to the Liberal Democrats’ long-standing view that 300,000 homes should be built each year over the next decade to alleviate the growing housing crisis. The Liberal Democrats would also look to create a not-for-profit British Housing Company which would have the power to claim unused land under compulsory purchase, for use in housebuilding. The party’s Housing Spokesperson Wera Hobhouse MP said: “Radical action must be taken to ensure people have the right to live in an affordable and secure home.”
Labour Party Conference The Labour party held its annual conference between 23-26 September. The occasion saw a large focus on Labour’s plans for nationalisation of energy and water markets, but also a huge pledge to increase the UK’s renewable capacity far higher than any large party has promised in the past. The pledge would see implementation of 52GW of offshore wind, a “doubling” of onshore wind and a “tripling” of existing solar capacity – all within 12 years. The UK’s current offshore wind portfolio included just 6.1GW of capacity in 2017, and so raising this to promised levels would be a huge task. Labour hopes to reduce the country’s emissions by 60% by 2030 and achieve net zero emissions by 2050.
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Electric Vehicles News Scottish government pledges EV charging and clean energy investment boost
First Minister Nicola Sturgeon has announced that this year the Scottish Government will invest £15mn to add an additional 1,500 electric vehicle charge points across the country. These will be split across homes and businesses and will include 150 public charge points. The announcement came as part of Sturgeon’s Programme for Government 2018-19, published on 4 September, which included plans to more than double investment in new ultra-low emission vehicles from £8mn to £20mn.To help do this, the Scottish Government will create at least 20 “electric towns” across the country by 2025. Electrification is to further manifest in the public sector, with a commitment to add at least 500 new ultra-low emission vehicles to public sector fleets. This will include more than 100 green buses added through use of the £1.7mn Green Bus Fund. The programme also committed an additional £7bn towards infrastructure in Scotland, including clean energy, on top of the government’s existing spending plans by 2026. This includes a further £2mn this year to support innovation and help reduce the costs of offshore wind.
R&D funds announced for EV innovation Funding provided by UK Research and Innovation and delivered by Innovate UK has been announced for “innovative businesses” looking to develop and produce future electric vehicle (EV) batteries. The £25mn fund follows an announcement by Theresa May for a £106mn package for research and development into cleaner battery, vehicle and refuelling technology. Suitable project targets specified in the fund include minimising EV battery manufacturing costs, lengthening cell life, increasing energy and power density per pack and improving recyclability. Funding will be allocated in 2 ways: Up to £23mn for industrial research and development, and up to £2mn for feasibility studies. Both routes are required to improve the ability to scale up battery use and production and help to build the UK supply chain. The deadline for applications is 12 December. Innovate UK announced another allotment of funding with the Office for Low Emission Vehicles on 25 September. The fund will total up to £22mn and is
targeted at UK businesses working on ultra-low or zero-emission vehicle projects.
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Up to £16mn is available to fund multiple collaborative research and development projects with a total value of less than £4mn, and up to £4mn for a single, large, high-value research and development project. Funding for up to 70% of a project’s costs is available. The competition is seeking ventures focusing on the development of advanced power electronics, machines and drives for automotive applications, improved energy storage and management, and development of lightweight vehicles. The deadline for all applications is 6 December.
London councils accused of stalling EV charge point uptake SSE has said that local councils in London have delayed its plans to install electric vehicle (EV) charging points, The Guardian reported on 9 September. The supplier said that three years ago it had hoped to have 6,000 charge points in London by now, but that to date it had installed just 762. SSE is the contractor installing the chargers for the Source London network, run by Bolloré. Factors like slow decision-making and different approaches to implementing charging infrastructure across different local councils were blamed for the poor progress. Sector Director for EVs at SSE Kevin Welstead said: “The issue is that we have to effectively negotiate with each of the 33 individual London boroughs so we can install charge points alongside their parking bays and some are more progressive on the electric vehicle agenda than others.” London Councils defended its position on electric vehicles by making clear its desire to electrify the road. Julian Bell, chair of London Councils transport and environment committee, said: “London boroughs are committed to supporting environmentally friendly transport” and explained that that the boroughs also have “a duty to consider the needs of pedestrians and other road users and to make sure that these services are delivered to high standards”.
Audi announces its first electric vehicle Audi unveiled its newest SUV on 17 September at an event in San Francisco. The SUV is Audi’s first entry into the fully-electric market, operating as an electric-only vehicle unlike any previous models. Audi said the “E-tron” will be capable of a range of up to 248 miles and come equipped with fast charging technology – able to increase the battery’s charge to 80% within 30 minutes at 150kW charging points. This rivals the quoted charging times for the Tesla S model. The four-wheel drive E-tron is expected to be released in the UK in early 2019, with prices starting from £70,805. A follow-up, the Audi E-tron GT, is expected in 2020, when it will be one of the first vehicles to be able charge at 350kW.
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Pixie Energy’s second annual conference
Pixie Energy hosted its 2018 annual conference at Norwich Cathedral on 10 September. Members of the Pixie team gave briefings on the progress of our local energy innovation projects, and we also welcomed external speakers on the theme of market transformation, Alex Jakeman from local network UKPN’s innovation team and Paul Bourgeois of the Greater South East Energy Hub. The event followed Pixie Energy’s launch event last summer, which first introduced the East Anglian Energy Market Innovation Project – the overarching project building on sister company Cornwall Insight’s deep national knowledge and relationships by establishing innovation projects with local partners to yield “learning by doing” in smarter, low-carbon solutions. Much progress has been made over the past year, and this event focused on Pixie Energy’s flagship project: the Norwich Virtual Energy Community (NVEC) project, which was introduced by Pixie Energy Founder Nigel Cornwall. A key objective of this transformative project is to capture better value for locally produced solar and other low-carbon power. Using a recently created “innovation sandbox”, Pixie Energy aims to allow separate energy suppliers to provide electricity to a single property from solar panels, batteries, and for the charging of electric vehicle behind the meter. It will also incentivise smarter consumption of energy through application of time-of-use and time-of-export tariffs, which will be provided by balancing supplier Green Star Energy. The NVEC project will initially deploy around 50-100kW of domestic solar panels and 30kW of domestic batteries on 10-15 sites in Norwich and North Norfolk. Energy generated will be used by the host households or stored in the batteries. Participants in the scheme will have the chance to purchase excess power produced or stored from other project participants. The initial project will be set in place by the end of the year, doubling in size by April 2019 as part of phase two. An important aim is to demonstrate that viable local markets can develop around new small-scale low-carbon generators in a subsidy-free world. The conference featured presentations from various other speakers, including Pixie Energy’s Tom Andrews, who introduced the Energy Company Obligation (ECO) Switch initiative. The idea will see the development of a trading platform to make delivery of ECO measures more flexible, efficient and targeted, bringing in funding to East Anglia. The project aims to join up data from councils and social housing providers with energy suppliers and energy efficiency installers. The platform is set to launch in 2019.
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