UK Government Agrees to Build Sizewell C Nuclear Plant
The UK government has confirmed that the Sizewell C nuclear power plant in Suffolk will be going ahead, and that they are taking around a 45% stake in this project. The power plant is expected to begin operating mid to late 2030s, generating around 3,200 MW.
It is estimated that this new power station will cost ยฃ38 billion, a significant increase on the original estimate of ยฃ20 billion. This new budget, insiders claim, includes additional money for risks such as inflation and potential overruns, which were not factored into the original estimate from 5 years ago.
Sizewell Cโs design will be almost identical to Hinkley Point C and is due to be completed by 2031 following pandemic-related delays. This is all part of the governmentโs policy to reduce the UKโs reliance on imported gas and electricity.
British Gas and EDF Energy are also among the key investors in this new project.
UK Government Abandons Plan for Zonal Pricing of Electricity
The UK Government released its Review of Electricity Market Arrangements (REMA). As part of this review, Ed Miliband, Secretary of State for Energy Security and Net Zero, affirmed that the UK would not be introducing zonal electricity pricing and would instead look to reform the current national pricing system for England, Scotland, and Wales. These reforms will review how transmission charges are currently calculated, and they will look to incentivise the private sector to invest in renewable energy in areas of higher demand.
There was a mixed reaction in the energy markets as supporters of zonal pricing believe it had the potential to reduce electricity costs and may have encouraged companies to locate closer to sources of energy. They point to Australia, Sweden, and Italy as countries where zonal pricing is currently in operation and running successfully. Critics believe that zonal pricing could have added additional risk around investment in UK infrastructure, potentially deterring bidders from applying for future renewable projects.
UK Government to Create New Water Regulator
The UK Government announced that it will make the biggest overhaul to the water sector in England and Wales since privatisation in 1989. This announcement follows a report by the Independent Water Commission that heavily criticised the regulator Ofwat for its numerous systemic failings.
In the report, it was recommended that Ofwat should be abolished, and a new, more powerful regulator should be formed. The new regulator not only replaces Ofwat, but they would also take responsibility for water away from the Environment Agency, Natural England, and Drinking Water Inspectorate, thus simplifying a currently complex system.
A white paper will be issued later this year outlining the proposed reforms, which will then form the basis of the new water reform bill.
UK Government Announces Support for Electric Vehicles
The Department for Transport (DfT) recently announced a multi-million investment package in the UKโs electric vehicle infrastructure. As part of this investment, the government will provide local authorities with ยฃ25 million in funding to assist in expanding at-home charging for households without driveways. The fund is aimed at bolstering the UKโs growing charging network. There are currently around 82,000 public charging points in the UK, and this is expected to more than double by 2030.
A new grant system is also being brought in to support businesses that are looking to install depot-based charging points when they upgrade their heavy goods vehicles, vans, and coaches to electric.
NHS England will also receive investment of around ยฃ8 million, with the government looking to electricity and upgrade its fleet across more than 200 sites.
Studies Show New Renewable Energy Now Cheaper than Fossil Fuels
In two recently released United Nations (UN) reports, which stated that renewable energy is now almost always the cheapest and quickest route when it comes to new electricity generation. They noted that 90+% of all new renewable power projects installed globally where now cheaper than the lowest-cost fossil fuel alternative.
Solar panels are now about 41% cheaper to install compared to fossil fuels; they were once four times more expensive. Meanwhile, offshore wind turbines are roughly 53% cheaper, making them one of the most affordable renewable energy sources. Investment in renewable energy is also surpassing that in fossil fuels; last year, $2 trillion was invested, a 70% increase over the past decade, and $800 billion more than what was invested in fossil fuels.
UN Secretary General, Antonio Guterres, said of this news, โWe are on the cusp of a new era. Fossil fuels are running out of road. The sun is rising on a clean energy age.โ However, there is some pushback from some countries, e.g., the USA, where incentives for cleaner energy have been cut in favour of coal, gas, and oil generation.โ
Government Looks to Revise Energy Intensive Industry (EII) Exemption
The Department for Business and Trade (DBT) has opened a consultation on revising the EII Exemptions.
Currently businesses eligible for this exemption receive a 60% discount on their Renewables Obligation, Feed-in Tariffs, and the Capacity Market costs. The new proposal is to increase this exemption to 90%, which could see their costs fall by a further ยฃ7 per MWh, bringing electricity pricing more in line with their competitors in France and Germany. This consultation started on 18 July and is due to last for 4 weeks.
That concludes this issue of the UK Energy Industry News Update, highlighting key developments shaping the energy sector. For further details or to discuss how these changes may impact you, please contact us.